SBI Banking & Financial Services Direct Growth INF200KA1507

SBI Banking& Financial Services Fund earns a High Process Pillar rating.

The predominant contributor to the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.7 stars. Impressive risk-adjusted performance also strengthens the process. This can be seen in the fund's 10-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. The parent firm's five-year risk-adjusted success ratio of 62% supports the process. The measure indicates the percentage of a firm's funds that have outperformed their respective category's median return for the period. Their commendable success ratio suggests that this firm does well for investors and that this fund may benefit from that.

This strategy tends to pick smaller market-cap companies compared with the average fund in its peer group, the Sector - Financial Services Morningstar Category. But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Looking at additional factor exposure, this strategy has continually had more high-yield exposure than the Morningstar Category average during recent years, with the portfolio holding more stocks with high dividend or buyback yields. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. Different from its historical appetite, however, the Yield factor was in line with the Morningstar Category average in recent months. This strategy also has had a position favoring high-quality stocks in recent years, which could contribute to higher downside risk protection. Such holdings could cause it to trail peers during economic booms, but help it better withstand busts. In the most recent month, however, the fund's Quality exposure was in line with the Morningstar Category average. In addition, this strategy has an underweight bias to the volatility factor, meaning investing in stocks that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. Nevertheless, the fund's Volatility exposure was in line with peers in the latest month. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio has allocations in its top two sectors, financial services and consumer cyclical, that are similar to the category. The sectors with low exposure compared with category peers are technology and healthcare; however, the allocations are similar to the category. The strategy owns 29 securities and is relatively concentrated. In particular, 76.4% of the fund’s assets are housed within the top 10 holdings, compared with the category’s 73.6% average.