Fund of Fortnight
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund Manager Analysis, Fund of Fortnight, Mutual Fund
The equity market seems to be trading in a range and there are hardly any triggers to move the needle either way. Even the current earning season till now is at best a mixed bag.
This is our mutual fund recommendation. 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.
SBI Flexicap Fund - Direct Plan
Reason for recommendation The equity market over the past seven months has seen a lot of volatility and corrected by almost 12 per cent. Nevertheless, in the last one month it has been trading sideways in a narrow range, and we may see a short-term rise in the market. To capitalise on such a rise, you should invest in flexi-cap funds that invest in call categories of stocks. SBI Flexi-Cap Fund seems to be a right choice as it has a Large-Cap bias. At the end of April 2022 almost 55 per cent of the fund’s net assets were invested in large-cap stocks, 12.4 per cent in Mid-Cap stocks and 10.36 per cent in small-cap stocks.
The fund also has minor exposure to foreign equity. This fund invests in 52 stocks with top 10 holdings contributing 42.95 per cent and the top three sectors contributing around 47 per cent. Although the concentration is slightly above the moderate level, it is not overboard. In terms of style, the portfolio of the fund shows that it is following a blend of value and growth style with a tilt towards the former. In the current scenario this theme is likely to outperform others. This is also visible through the fund’s YTD performance, which remains in the top quartile of its category.
Except for 2020 and 2021 the fund has always remained in the top two quartiles in terms of performance. On the sectoral front this fund is overweight on financials, energy, services and consumer discretionary, while is underweight on technology, healthcare and automobile. In terms of stocks the fund has the highest exposure to some value names in the financial space like ICICI Bank, HDFC Bank and SBI. HCL Technologies and ITC are the other prominent companies among the top 10 holdings of the fund. The fund is slightly higher as regards volatility in its category and hence is more suitable for moderate to aggressive investors
