Jul 01, 2024 5 min read

SBI PSU Fund: A Detailed Review for 2024

PSU Funds have recently become a hot topic of discussion, due to their impressive returns. In just one year, PSU mutual funds have yielded 90-100% returns, while Public Sector Undertaking (PSU) mutual funds focus on investing primarily in the stocks of government-owned and operated companies. One of the highlighted schemes in the PSU mutual fund is SBI PSU Fund. The key question is whether it is a good time to invest in the SBI PSU Fund. To answer this, we will delve into its recent performance and analyse how this fund is currently performing.

Recent Performance

The SBI PSU Fund has shown impressive results recently in absolute terms, the SBI PSU Fund has provided exceptional returns, surpassing average market returns. over the past year, the fund returned 97.58%, compared to the benchmark Nifty50 returns of 100%. Over the last three years, the fund returned 39.53%, slightly better than the benchmark's 39.07%. However, in relative terms, the fund's performance closely mirrors the benchmark, which shows that it has performed well, it has not significantly outperformed the Nifty50 Index.

 Recent Performance

What Does SBI PSU Investing Strategy Look Like?

SBI Mutual Fund is committed to identifying and investing in quality, scalable businesses that promise long-term growth. Their investment strategy is centred around long-term holdings, with the objective of generating high absolute returns. Within their PSU (Public Sector Undertaking) scheme, they put immense value on selecting top-tier PSU companies that match their particular investing framework. This disciplined approach ensures that they are consistently investing in stable, well-managed businesses with strong growth potential, providing their investors with opportunities for substantial returns over time


Time to Bring the Spotlight on Who Managed SBI PSU Fund?

Fund Manager

The SBI PSU Fund is in expert hands Mr. Rohit Shimpi as the fund manager. His extensive experience and proven track record make him well-equipped to navigate the complexities of the public sector undertaking (PSU) space.

Mr. Rohit's journey with SBI Funds Management Limited (SBIFML) is impressive. He joined the firm in 2006 as an Equity analyst and later managed the company's offshore fund from 2011 to 2015, enhancing his understanding of global market dynamics and their impact on domestic PSU stocks. His ability to analyse market trends, identify undervalued PSU companies, and construct a diversified portfolio is likely to benefit the investors of the SBI PSU Fund.


Portfolio Allocation: The Idea of Diversification of SBI PSU Fund

Sector Allocation

Right now, all sectors of the economy are doing really well and giving investors a chance to earn good returns. Some sectors that were previously undervalued are now looking like great opportunities to invest in. But because these sectors tend to follow economic cycles closely, they can be very unpredictable and risky. This means there's a higher chance of big swings in their prices, which could affect your investment returns.

Sector Allocation

Top Holdings of SBI PSU Fund

Over the past year, the top stocks in our holdings have done incredibly well, giving great returns. However, it's important to understand that their performance relies a lot on the trends within their sectors and actions taken by the government. Changes in government policies or sector-specific developments can significantly impact how these stocks perform in the future.

 Holdings of SBI PSU Fund

What Does Rolling Return Bring to SBI PSU Fund

On a long-term basis, this fund has not delivered satisfactory average returns. The sector it invests in has underperformed, failing to beat market returns consistently. Moreover, the fund has also struggled to surpass the average returns of its category. The consistency of returns is quite poor, exhibiting a cyclical performance that heavily depends on the performance of the public sector undertakings (PSUs) and government spending. Given these factors, this fund is not suitable for systematic investment plans (SIPs).

Rolling Return

Stock and Quality

The SBI PSU fund's performance demonstrates solid sales growth, reflecting our robust market presence and strategic initiatives. Our portfolio includes companies with good earning margins, and we have seen significant improvements in the margins of public sector undertakings (PSUs). Additionally, many of the stocks in our portfolio are currently undervalued, offering an excellent buying opportunity for investors. Overall, the quality of our portfolio is strong, well-aligned with current market conditions, and positioned for sustainable growth.

Sales Growth 13.15
Earning Growth 21
P/E Valuation 10.88


Suitability of SBI PSU Fund

This mutual fund is particularly suitable for investors with an active investing style who seek high returns and possess a strong tolerance for risk. It requires strategic entry and exit timing to maximize gains and is not ideal for SIP (systematic investment plan) Given the current low valuations, a lump sum investment over a 2-3 year horizon, coupled with a well-defined exit strategy, can be highly beneficial. Compared to other funds in the category, this fund offers unique opportunities for substantial growth but demands a more hands-on approach and careful management of market timing.

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