SBI Focused Equity Fund Direct Growth

SBI Focused Equity Fund invests in 30 high-conviction stocks across market capitalization and sectors. The goal is to build a ‘focused’ portfolio of quality stocks. The fund invests at least 65% of its assets in equity and equity-related instruments. It can invest the remaining in debt, money market instruments, REITs, InvITs, etc.

The fund is benchmarked against S&P BSE 500 TRI, which helps them measure their performance against the broader market. Unlike typical diversified funds, this fund sticks to a focused strategy of investing in a select few companies. This approach aims to deliver higher returns by concentrating capital.

Investment Strategy

The fund manager at SBI follows a bottom-up approach while picking stocks to construct the focused fund’s portfolio. This method includes analysing stocks on an individual basis rather than looking at macroeconomic trends.

Key areas that the fund pays attention to are:

- Competitive advantages

- Strong cash flows

- Scalable business models

- Robust management teams

Who Should Invest In SBI Focused Equity Fund?

Investors looking for a mutual fund that invests in a select set of high-conviction stocks, chosen through in-depth research rather than broad diversification, may find SBI Focused Fund suitable. 

However, since the fund holds a concentrated portfolio, even a few underperforming stocks can lead to significant short-term volatility. That’s why this fund is best suited for those with a moderate to high-risk appetite and a long-term investment horizon.

Risk Mitigation By SBI Focused Fund

While the fund is exposed to risks like market volatility, liquidity constraints, and interest rate fluctuations, these cannot be fully avoided, but they can be managed. The fund manager actively implements several risk control measures, these include:

- Diversifying across sectors and themes to reduce exposure to market risks

- Selects stocks with high trading volumes to ensure high liquidity 

- Invests in fundamentally strong, low-debt companies to reduce credit risk

Allocation & Historical Returns

Currently, the fund's portfolio comprises 7.6% small-cap stocks, 44.89% large-cap stocks, and 30.04% mid-cap stocks.

With an AUM of ₹36041.0 crores, SBI Focused Equity Fund Direct Growth generated a return of 13.9% in 1 year, 18.3% in 3 years, 23.3% in 5 years. while its benchmark index (Nifty 500) generated 10.0% in 1 year, 18.7% in 3 years, and 24.5% in 5 years.