Fund of Fortnight

Fund of Fortnight

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 Small Cap Fund - Direct Plan (Growth)



Reason for recommendation

Over the last three months, the small-cap-dedicated index has generated returns in excess of 20 per cent, higher than both mid-cap and large-cap. In the same period, however, it has generated a negative return while others (large-cap and mid-cap) have generated a positive return. And though it is presently trading above its pre-pandemic levels, it is still very well below its all-time high reached in the year 2018. Therefore, there is a lot of room for it to rise. Given that, it makes sense to invest in small-cap dedicated funds now. SBI Small-Cap Fund, a small-cap-dedicated fund, is one of such funds that will help you to ride the small-cap rally. Since its inception, this fund has delivered 25.09 per cent annually. Looking at its asset allocation, it invests 69.55 per cent in small-caps, 30.44 per cent in mid-caps and not a single penny is invested in large-caps. In terms of sectoral allocation, it is overweight on engineering, construction and FMCG sectors which is a good thing as these sectors would benefit the most from the ongoing economic recovery. It has invested in 49 stocks at the end of November 2020 of which the top 10 contribute 38.04 per cent. Also, its current portfolio consists of quality stocks like JK Cement, Elgi Equipments, City Union Bank and Blue Star.



In terms of investment strategy, this scheme follows a blend of growth style and value style investing while the stock selection is done through a bottom-up approach. This fund fares well in terms of risk-return metrics when compared with its peers as reflected through a good Sharpe ratio and Sortino ratio numbers. That said, moderately aggressive and aggressive risk-takers can consider investing in this scheme and that too in a staggered manner via SIP. We would urge investors to avoid any lump sum investments and your investment horizon should be more than two years.

Rate this article:
No rating
Comments are only visible to subscribers.

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR