Why these SBI funds get a Bronze

Our analyst looked at two equity funds managed by Sohini Andani.
By Morningstar Analysts |  10-08-17 | 
 

SBI Mutual Fund witnessed a lot of flux the past. The fund house’s unsuccessful attempts to retain talent within the investment team, the absence of documented processes and differentiated funds impacted the AMC negatively.

Despite witnessing a lot of flux in the past, the fund house has come a long way under its new leadership, which was put into place in 2009. Navneet Munot--CIO at SBI Mutual Fund--and R.Srinivasan implemented various measures to address these issues and have been successful in turning around the fortunes of the AMC.

Sohini Andani is an experienced portfolio manager and an astute stock-picker. Her extensive research experience stands out in her stock picks and is reflected in the AMC’s bottom-up approach to stock selection. She used to track the IT and banking sectors in the past and currently tracks the agrochemical sector. She is rightly credited with having mentored the analyst team at SBI along with R.Srinivasan. We also view the presence of CIO Navneet Munot and head of equities R.Srinivasan as a positive. In our opinion, the trio of Munot, R.Srinivasan, and Andani constitutes the core pillars at the AMC and has been instrumental in structuring the processes within the fund house.

Overall, we are impressed with the investment team’s disciplined approach and believe that the investment process is well defined. Despite this, we’d like to see the processes and the team remain stable over a longer period before we build further conviction.

SBI Magnum Midcap

Category: Small/Mid Cap

Star Rating: 2 stars

Analyst Rating: Bronze

Fund Manager: Sohini Andani

The fund house has witnessed a few ups and downs, but the SBI Magnum Midcap fund has endured these changes since its inception in 2005. We witnessed many positive attributes on the fund under its current investment team, some of them being the leadership of an experienced stock-picker, the backing of a stable process, and an experienced team that has been trained in-house. We maintain a Morningstar Analyst Rating of Bronze on this fund and would like to see the process and the team remain stable over a longer period before we build further conviction.

The SBI Magnum Midcap fund is an absolute return strategy that invests in Andani’s high-conviction ideas. The fund uses in-house templates and processes that are key to the execution of the strategy. Although the mandate allows the manager to invest up to 20% in large-cap stocks, most of the large caps that form a part of the portfolio are mid-caps that have grown in size. We think that these stocks give the fund a cushion in terms of additional liquidity. The fund is run based on a bottom-up approach to investing with a clear focus on a company’s fundamentals.

SBI Bluechip

Category: Large Cap

Star Rating: 4 stars

Analyst Rating: Bronze

Fund Manager: Sohini Andani

The SBI Bluechip fund stands out on multiple fronts. It is a consistent performer led by an experienced stock-picker, backed by a stable process and an experienced team that has been trained in-house. The AMC has also been promoting analysts into fund management roles and we think that’s a positive. Despite this, we’d like to see the fund house remain stable over a longer period of time. In our opinion, we think it appropriate to retain a Morningstar Analyst Rating of Bronze on this fund.

The Bluechip fund is a relative return strategy that seeks to outperform the benchmark as well as its peers on a consistent basis. The fund uses in-house templates and processes that are key to the execution of the strategy. Despite being a large-cap fund, the mandate allows the manager to invest up to 20% in mid-cap companies. Having said this, Sohini tends to invest in mid-caps with a relatively higher market capitalization and currently has an exposure of around 10% in mid-caps on this fund.

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