We review the SBI Blue Chip Fund. This shall be short.
As usual, we look at the long-range performance of the fund since its NFO (2006). Below is monthly updated graph.
The fund’s performance seeks to play hide and seek with the broad market index. In fact, the orange line never crosses the blue line. But this can be wrong because it anchors the start to the NFO time. Below we plot rolling annual returns.
Indeed, the fund has sometimes done better than the broad market and sometimes done worse (recent 12 months have been worse than market). We can analyze the fund from a statistical perspective. Below are the numbers
Beta (Correlation to index): ~90%
Alpha (Out-performance): 0.3% annually with low probability. In statistical terms, this alpha has a high p-value. It is another way of saying the fund has exhibited negligible out-performance and we cannot be sure if this out-performance different than noise.
Conclusion
The fund has nothing going for it. It under-performs a simple broad market index for 15 years. There is no real strategy (performance wise) different from the broad market. It amazes me as to how despite such obvious under-performance the fund has such huge AUM.
I would recommend choosing a Nifty500 or BSE500 index fund over this fund.