SBI Multicap Fund – Direct Plan – Growth


Overall analysis

1-yr rolling excess returns remains below the lower quartile and has given good performance and TE against benchmark have been good overall; The fund has given the maximum excess return in comparison to its peers; and has made good progress over the past 1 year.

Performance analysis 

Rolling returns – 1yr rolling excess returns over 1year 

Snail trail – 1y rolling excess over 1yr

Tracking error – 1yr rolling over 1yr1

Information ratio – 1yr rolling over 1yr

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The funds rolling return chart shows that the fund is below the lower quartile, the maximum rolling return of multi cap is 9.8% this specific fund’s is -5.6% which is not ideal. The Rolling Return Chart shows a poor performance.

The fund has not performed well in the past 1 year.

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

The snail trail chart is not great, but is in the harmless section of the chart. The fund has mostly been negative with negative risks.

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

The TE of the fund started from 6.2% and dropped in May 2023, as of now it is 4.6% which is meant to be reasonably active.

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

The information ratio of the fund dropped drastically from April till July and now is negative, which is not ideal.

Portfolio analysis

Stock style chart

Morningstar’s stock style chart shows the ‘style’ of the stocks in the portfolio in terms of size and value/growth style. The centroid shows the weighted average while the zone circle shows how varied the stock styles are.

The centroid indicator of this fund lies between the top right corner of the stock style chart- which indicates that; the portfolio of this fund has weightage over large cap- growth category stocks, while its peers also have similar growth securities in its portfolio basket. Ownership zone indicator ring says that; the fund has picks around all the caps (small, mid & large) with blended & Growth category stocks, but has less involvement in small cap- growth securities. While other multi-cap funds indicated by the yellow (ring)- indicates that its category has channelised its funds only into mid, large- growth & blended types of stocks.

Factor profile chart

Morningstar’s factor profile shows the historical style analysis of the stocks in the portfolio in terms of size, value/growth style and other key factors. The blue circle shows the fund relative to the black dot for the category average.

Above factor profile chart demonstrates that yield/returns is as low as its category average & has declined- by 5yr historical range indicator point of view, while volatility & liquidity is low & according to the 5 years historical range it has been decreased till date, at times it used to be at high levels also. Momentum of the securities held & traded is high & has outperformed its category average. Overall quality of the stock picks is average as same as its peers. Therefore the portfolio stocks are full of growth stocks throughout the 5 years historical range. Size indicator states; it is small & low as compared to its category.

Prepared by – Hemanth Reddy, August 2023

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