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SBI Mutual Fund , the country's largest mutual fund, with assets of around Rs 8.5 lakh crore, is coming out with its latest offering, the SBI Energy Opportunities Fund. The fund opened for subscription on February 6, 2024 and will carry on until February 20, 2024.
NFO snapshot
| Fund name | SBI Energy Opportunities Fund |
| SEBI category | Sectoral/Thematic |
| NFO period | February 6, 2024 to February 20, 2024 |
| Investment objective | The fund will look to benefit from the growth in traditional and new energy sectors and allied business activities. |
| Benchmark | Nifty Energy TRI |
| Fund managers | Raj Gandhi and Pradeep Kesavan (Overseas securities) |
| Exit load | 1 per cent (of applicable NAV) if units are redeemed or switched-out wiithin 1 year from the date of allotment. Nil thereafter. |
| Tax treatment | Same as any other equity fund. If units are sold after one year: Gains beyond Rs 1 lakh are taxed at 10 per cent. (However gains up to 1 lakh in a financial year is tax exempt). If units are sold within one year: 15 per cent |
About SBI Energy Opportunities Fund
-
This sectoral fund will look at energy companies. It will be the first such fund in India to purely focus on the energy sector. There are two other funds -
Tata Resources and Energy Fund
and the
DSP Natural Resources and New Energy Fund
- that also look at the energy sector but Raj Gandhi, one of the fund managers, said that those two are a blend of energy, cement, and chemicals.
-
The SBI Energy Opportunities Fund will be benchmarked against the Nifty Energy TRI. This index has given returns of around 71 per cent in the last 12 months, as of February 5, 2024. That's mainly due to a few top public sector stocks, such as
NTPC
,
Power Grid
,
ONGC
, and
Coal India
, gunning out returns in the range of 70 per cent to 105 per cent in the last 12 months.
-
Currently, the index has 10 constituents. However, the investment universe of the fund will include companies engaged in traditional and new energy-related businesses and not just the oil and gas, utilities, and power sectors. The fund will be looking to invest in sectors such as power ancillaries, green energy, oil value chains, gas value chains and power value chains.
-
According to the fund house, there will be around 90-95 stocks in the overall investment universe.
-
The fund is likely to run a concentrated portfolio of around 20-25 stocks.
- The SBI Energy Fund will also look at investing in overseas companies. The fund can invest up to 35 per cent of its money in international stocks.
Returns of Nifty Energy TRI (in %)
| 1 year | 30.61 |
| 3 years | 28.22 |
| 5 years | 21.09 |
| 10 years | 17.9 |
|
Date as on Dec 29, 2023 Source: Investor presentation of the scheme |
|
About the fund managers
Raj Gandhi will be in charge of managing the domestic allocation, and Pradeep Kesavan will be in charge of managing foreign securities.
Raj Gandhi has over 17 years experience in the financial services industry. He joined SBI Funds Management in October 2017 and focuses on tracking commodities and related sectors such as energy and metals (including precious metals). This will be the first fund to be managed by Raj.
Kesavan, meanwhile, joined the fund house in July 2021. He has over 18 years of experience in the financial services sector. Right now, he manages the SBI International Access-US Equity FoF fund.
Our take
We have long believed that a retail investor should ideally avoid thematic or sectoral funds like these. They can be extremely risky and volatile.
Instead, opt for diversified equity funds. Flexi-cap funds is one such example.
In fact, flexi-cap funds, on average, have a 7 per cent allocation in energy companies. So, by investing in a flexi-cap fund, you automatically get some exposure to energy companies.
However, if you are too keen and want to ride on the specific theme or sector fund, put only 5-10 per cent of your money in this fund.
Also read: Three questions to ask before investing in an NFO
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