SBI Mutual Fund has recently launched a new fund, the SBI Energy Opportunities Fund, which will be benchmarked against the Nifty Energy Index. This index has delivered impressive annualized returns of 20% over a five-year period, outperforming the Nifty 50 Index which delivered 14.9% annualized returns in the same period.
The fund aims to invest in a mix of traditional and new energy businesses, including companies involved in the gas value chain, power utility value chain, and oil value chain. It will also consider investing in power ancillary companies such as transformer manufacturers, heavy electrical equipment makers, and energy efficiency plays.
The focus of the fund will initially be on large-cap companies, but the portfolio could expand to include different market caps as newer energy businesses emerge. The fund will also have the provision to invest in international stocks, with the flexibility to allocate up to 35% of its corpus to international stocks.
In terms of valuation, the Nifty Energy Index is currently trading at a 25% discount to the Nifty 50 Index, making the valuations appear to be in favor of the former. However, the fund is seen as a medium-term tactical investment, with the potential to capture the entire energy theme rather than focusing on a particular sector.
Retail investors are advised to consider their risk appetite and investment strategy when evaluating thematic or sectoral funds. While the SBI Energy Opportunities Fund presents a tactical opportunity, timing is critical when it comes to investing in thematic funds.
The new fund offer period for the SBI Energy Opportunities Fund is open until 20 February, giving investors an opportunity to explore this offering from SBI Mutual Fund.
