After launching mid cap and flexi cap funds in 2005, SBI Mutual Fund's latest offering is a "blue chip" fund. SBI BlueChip Fund (SBF) is an open-ended diversified equity fund, mandated to invest in blue chip stocks
Blue chips (or large caps) are stocks from large organisations with well-established businesses. They have an established business presence and could be leaders in their respective segments. From an investment perspective, information about these stocks is widely available and they tend to be well-researched. They also have a consistent track record; as a result, they are equipped to offer a degree of stability to the investor's portfolio.
On the flipside, a fund which invests in stocks of a homogeneous variety (in terms of market capitalisation) can acquire a sectoral flavour. The fund manager's choices can become restricted in light of the predominantly large cap theme.
Equity schemes from SBI Mutual Fund have pitched in impressive performances in the recent past. However these schemes had a distinct mid cap bias; as a result large cap stocks remain an unchartered territory for the fund house.
SBF is likely to be a medium to high risk investment proposition. We recommend that investors who wish to add a large cap fund to their portfolios, must consider investing in established funds like Franklin India Bluechip and Principal Growth before investing in SBF.
