SBI Mutual Fund’s Top 5 Schemes Delivered 55-64% Returns in a Year: Should You Invest?

Investors looking for high-growth opportunities in mutual funds often turn to the largest players in the industry, and SBI Mutual Fund (SBI MF) has proven its strength. In the past year, SBI MF’s top five equity schemes have delivered substantial returns, ranging between 55% and 64%, making them stand out among equity funds. Interestingly, these schemes cover various sectors, including PSU and healthcare, as well as large-cap ETFs and index funds.

These returns have attracted investors seeking capital growth, and with high SIP (Systematic Investment Plan) returns over the last three years, these funds have sparked interest among those with a long-term perspective.

Top 5 SBI MF Schemes with Stellar Performance

Here’s a closer look at SBI MF’s top 5 performing equity schemes over the past year:

1. SBI PSU Fund (Direct Plan)

1. 1-Year Return: 64.48%
2. 3-Year SIP Return (Annualized): 45.28%
3. Fund Type: Thematic, focused on public sector (government) companies
4. SBI Healthcare Opportunities Fund (Direct Plan)

2. 1-Year Return: 57.16%
3. 3-Year SIP Return (Annualized): 38.17%
4. Fund Type: Sectoral, investing in healthcare and pharmaceutical companies
5. SBI Long Term Advantage Fund Series V (Direct Plan)

3. 1-Year Return: 56.04%
4. 3-Year SIP Return (Annualized): 34.64%
5. Fund Type: ELSS (Equity-Linked Savings Scheme) for tax-saving benefits
6. SBI Nifty Next 50 ETF

4. 1-Year Return: 55.70%
5. 3-Year SIP Return (Annualized): 29.26%
6. Fund Type: Large-cap ETF, based on the Nifty Next 50 Index
7. SBI Nifty Next 50 Index Fund (Direct Plan)

5. 1-Year Return: 55.33%
6. 3-Year SIP Return (Annualized): 28.38%
7. Fund Type: Large-cap index fund investing in Nifty Next 50 companies

(Source: AMFI, Value Research)

These five schemes, although different in sector and type, have achieved substantial growth for their investors. Let’s explore how they differ and what makes each suitable for particular investor profiles.

Understanding the Investment Approach of SBI MF’s Top 5 Funds

These SBI MF funds cover a diverse range of investment categories:

1. SBI PSU Fund – This fund is a thematic scheme investing in government-owned companies. Known for its high returns this past year, the fund leverages the stability and growth potential of PSU stocks, which benefit from favorable government policies.
2. SBI Healthcare Opportunities Fund – A sectoral fund focused solely on healthcare companies, this fund gains from the rising demand in healthcare and pharmaceutical industries, especially during times of global health challenges. Sectoral funds like this, however, are generally high-risk and best suited for those bullish on healthcare over the long term.
3. SBI Long Term Advantage Fund Series V – As an ELSS, this fund not only offers growth but also tax-saving benefits under Section 80C. With a mandatory three-year lock-in period, it provides an incentive for investors looking to save tax and achieve equity market growth.
4. SBI Nifty Next 50 ETF and SBI Nifty Next 50 Index Fund – These large-cap funds follow the Nifty Next 50 index, investing in high-potential stocks that come right after the top 50 companies in the Nifty 100. The ETF and index fund are ideal for investors wanting exposure to diversified large-cap companies without actively managed fund expenses.

Why Have These Funds Performed So Well?

SBI MF’s top equity schemes have excelled due to their diversified yet high-growth portfolios. With funds spanning public sector, healthcare, and large-cap categories, they have capitalized on both sectoral growth and market trends. This strategic spread has paid off, as sectors like healthcare saw rapid growth, and large-cap companies provided stability amidst market fluctuations.

Despite their differences, these funds share two characteristics:

1. Equity Focus: All are equity-based schemes, benefiting from market highs.
2. High Risk-High Return: These funds come with a high-risk rating, which aligns with their potential for high returns.

SIP Performance: An Effective Way to Build Wealth

For investors interested in consistency, SBI MF’s SIP (Systematic Investment Plan) returns provide a good snapshot. Each of these top five schemes has shown strong SIP growth over the last three years, with SBI PSU Fund leading at an annualized return of 45.28%. The benefit of investing through SIPs is rupee cost averaging, which smooths out market fluctuations over time, especially useful in high-risk equity funds. For investors with a long-term view, SIPs in equity funds have proven to yield stable and compounding growth.

Are These Funds Right for You?

These high-return funds may appeal to investors looking for long-term wealth creation. However, they are most suitable for those who can handle market volatility and understand that equity schemes are ideally held for at least 5-10 years. Here’s what to consider:

1. Risk Tolerance: These funds, particularly thematic and sectoral, are “very high” in risk. Investors should be prepared for market ups and downs, as short-term dips can affect returns.
2. Investment Horizon: The funds are designed for long-term growth, making them ideal for investors with a 5-10 year horizon.
3. SIP Advantage: Given the market’s volatility, SIPs provide a structured way to invest gradually, building wealth over time through compounding.
4. Sector-Specific Consideration: Those choosing healthcare or PSU funds should have confidence in these sectors’ growth over the long term.

Final Thoughts on SBI MF’s Top Performers

SBI MF’s top equity schemes have delivered impressive returns in recent years, reflecting strong fund management and favorable sectoral growth. While these funds offer substantial growth, they are also high-risk investments best suited for long-term investors with the ability to tolerate market fluctuations.

Disclaimer: This article provides information and is not investment advice. Past performance is not a guarantee of future returns. Consult a financial advisor before making investment decisions.