SBI Bluechip and Reliance Large Cap are two of the best mutual funds in the large-cap category.

All you seasoned investors know that large-cap funds are probably the safest funds in the equity category.

In fact, during the market downfall of January 2018, these funds proved to be the safer option.

The newbie investors must be wondering why large-cap funds are not that volatile, although they are equity funds.
It’s because these funds primarily invest in the stocks of large companies, that have a market capitalization of 1-100. 

In this blog, I will analyze SBI Bluechip  and Reliance Large Cap Fund and weigh the pros and cons of both.

So let’s begin, shall we?

SBI Bluechip Fund

Investment objective

You’ve probably heard this line!

It is to propagate long-term capital appreciation by investing in a diversified collection of equity and equity-related stocks.

And as I mentioned before, they concentrate on companies whose market capitalization is within the BSE 100 Index.

Key Details of SBI Bluechip Fund

Particulars Details
Fund House SBI Mutual Fund
Scheme Open-ended
Class Equity
Scheme Benchmark S&P BSE 100 TRI
Category Large – Cap
Inception Date Aug-10
Total Fund Size (in Rs Cr.) ₹19,064 Cr
Fund Manager Sohini Adani
Availability of SIP Yes
Minimum Initial Investment 500/-
Expense Ratio 1.18%
Risk Moderately High
CEO Anuradha Rao

Equity Break up

Asset Allocation

Returns

Year  Returns
Year 1 9.5%
Year 3 11.30%
Year 5 21.80%

Fund Manager

Sohini Adani has over 11 years experience in investment and research.

Prior to working in SBI Mutual Fund, she worked as a senior research analyst at ING Investment Management. She joined SBI in 2007 as the Head of Research and subsequently became the portfolio manager in 2010.

Sohini is a chartered accountant and completed her BCom from Mumbai University.

Funds managed by Sohini Ahani are as follows:

  • SBI Magnum Midcap Fund
  • SBI BLuechip Fund
  • SBI Banking & Financial Services – RP (G)
  • SBI Banking & Financial Services – DP (G)

Reliance Large-cap Fund 

Investment Objective

Like any other equity fund, this fund also aims to generate long-term capital appreciation by investing in equity and equity-related securities.

The secondary objective of this fund is to generate constant returns by investing in debt and the money market.

Key Details of Reliance Large-Cap Fund

Particulars Details
Fund House Reliance Mutual Fun
Scheme Open-ended
Class Equity
Scheme Benchmark S&P BSE 100 TR
Category Large – Cap
Total Fund Size (in Rs Cr.) ₹10,126 Cr
Fund Manager Shailesh Raj Bhan
Availability of SIP Yes
Minimum Initial Investment 100/-
Expense Ratio 1.32%
Risk Moderately High
CEO Sundeep Sikka

Equity Break up

Asset Allocation

Fund Manager

Shailesh Raj Bhan is regarded one of the best mutual fund managers of the mutual managers of the mutual fund industry. He on-boarded Reliance in 2003 and has performed a stellar show since then.

You know your money is relatively safe now. Phew!

Funds managed by Shailesh Raj Bhan are as follows:

  • Reliance Large Cap Fund
  • Reliance Consumption Fund
  • Reliance Close-Ended Equity Fund
  • Reliance Multi-Cap – Direct
  • Reliance Consumption Fund

SBI Bluechip Fund vs Reliance Large Cap

1.Returns

The ideal investment period in a large-cap fund is 3+ years.

Now, if you look at the 3 year returns off SBI and Reliance, they’re both 11%. But, when you see the 5 year returns, Reliance presents a higher calculation.

Hence, if you choose for around 3 years, either fund can be a good option. But if you’re looking at capital appreciation over 5 years Reliance is the better choice.

Of course, here I’m talking in terms of just returns. There are other things to consider as well!

2. Minimum SIP amount

Now, both these funds are known to have insanely less minimum SIP amounts.

While in SBI you can start an SIP with Rs. 500, in Reliance, you can start with just Rs. 100.

I mean come on, 100 bucks! Why wouldn’t anyone invest?

Think about it, you can be a student and still invest in an equity mutual fund. Isn’t that great?

3.Expense Ratio

All you new investors, I know this concept this concept is slightly hard to understand.

But I’ll try my best to simplify it.

Basically, expense ratio is the money that is deducted from your total returns each year, as management and administration fee.

Reliance has an expense ratio of 1.32% and SBI has an expense ratio of 1.18%.

Now, you might think that such a minor difference can hardly affect your returns, but when you invest a substantial amount and for an ideal amount of time, expense ratio will make a difference.

4. Risk

Yes, we know both are large-cap funds and they will have the same risk factor.

However, if you are a cautious investor it is important to look at the equity break up and holdings

Particulars Large- Cap Mid- Cap Debt Cash
SBI Bluechip 82.20% 10.00% 1.00% 6.80%
Reliance Large Cap 79.90% 18.90%  0.3% 0.90%

In SBI Bluechip, 82.2% of the asset is invested in large-cap and only 10% is invested in mid-caps. It has a 1% stake in debt (for extra security!) and 6.8% is held as cash.

Reliance Large-Cap Fund is slightly riskier, as invests 79.9% in large cap, but almost 1/5th in mid-caps, hence, the higher return!

We can, therefore, derive that Reliance Large-cap Fund is riskier than SBI Bluechip, due to its asset allocation strategy.

Conclusion

Both these funds are brilliant in their respective categories and have proven to give consistent returns.

However, due to minor differences, different investors might opt for either.

As an investor, you must look at your objectives and goals, based on which you can choose the fund you want to invest in.

Both these funds have proven to give decent returns and are good investment options for investors who wish to seek capital appreciation in the equity spectrum.

There are pros and cons to each of these funds and an investor must analyze both of them in a proper manner, before making a decision.

Till then,

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those Groww