Fund of Fortnight

Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. 

Reason for recommendation
The SBI PSU Direct Plan-Growth fund is a thematic fund that focuses on public sector enterprises, offering investors a chance to tap into India's growth story. This fund has demonstrated superior short-to-medium-term performance compared to its category average. For instance, it delivered an impressive return of 8.57 per cent over 3 months, outperforming the category average of 6.94 per cent. Similarly, over 6 months, the fund's decline of -1.90 per cent was notably better than the category's average decline of -4.07 per cent.

The fund's portfolio is concentrated in key sectors such as energy, financials, and capital goods, with a significant allocation of 43.86 per cent, 28.48 per cent, and 8.54 per cent respectively. The top holdings include State Bank of India, GAIL (India) Ltd., and Power Grid Corporation of India Ltd., which are strong PSU giants poised to benefit from India's structural reforms and growth push. This strategic sector focus and high-quality portfolio position the fund strongly for future growth, driven by India's public sector resurgence and infrastructure-led growth story.

In terms of risk and return metrics, the fund shows similar volatility to the broader market, with a standard deviation of 23.05 and a beta of 0.97. However, it boasts superior riskadjusted returns with a Sharpe ratio of 1.08 and Sortino ratio of 2.15, outperforming its peers. This makes the fund an attractive choice for investors looking to tap into India's growth potential while managing risk.

Overall, the SBI PSU Direct Plan-Growth fund is a good investment option for those who believe in India's growth story and are willing to take moderate concentration risks and investment horizon beyond five years. Since this is a thematic fund, your exposure to the fund should not exceed 5-10 per cent of your portfolio.