SBI WISE Mutual Fund

The WISE in SBI WISE stands for Winning Investment Strategies in Equities Fund, and this is an open ended equity scheme.

Minimum Investment in the NFO

The initial investment required for this is Rs.10,000 for the non SIP plan, and Rs. 12,000 for the SIP purchase. There is no entry load, but there is an exit load of 1% if you exit within one year of allotment.

Equity Oriented Fund

The SBI WISE mutual fund is an equity oriented fund and will invest 90% – 100% of its assets in equity and 0% – 10% of its assets in debt and money market instruments.

Investment Strategy of SBI WISE Mutual Fund

The fund will hold stocks based on an index constructed by Societe Generale, which is called the Societe Generale Index. However, this is not a typical index fund because the index will be rebalanced every quarter and the portfolio of SBI WISE Mutual fund will be rebalanced every quarter based on the changes in the index.

The index will be constructed in the following way:

1. Screening of stocks: All stocks that are trading in the NSE will be taken and then stocks which don’t meet the following two criteria will be eliminated:
   1. Stock should have a market capitalization of at least Rs. 2500 crores.
   2. The 60 day average trading volume of the stock should be greater than Rs. 5 crores.
2. After eliminating stocks based on the above criteria, the remaining stocks will be given a score based on the following two criteria:
   1. Stock specific aspects like price momentum, short term variation in the stock holding, future earnings momentum etc.
   2. Fundamental aspects like company’s balance sheet, profit and loss, cash flow generated, EPS, P/E ratio etc.

Based on the two factors noted above, every stock will be given a score. The fund will then take the top 33% of the stocks with the highest score and the final index will be comprised of these. The investment manager will then invest in the constituents of this index on an equal weighting basis.

Expense Ratio of SBI WISE Fund

You get to pay a fee of 2.5% of weekly average net assets for all this jazz.

Risk Factors

Since this is a mutual fund primarily invested in equities, the regular risk factors faced by stocks will be borne by this fund. The key thing to keep in mind is that there is no promise of capital preservation or guaranteed returns in this fund.

Conclusion

The SBI WISE fund is an equity fund which will comprise stocks trading on the NSE, and its portfolio composition will reflect an underlying index, which will be rebalanced quarterly. Its fees and expenses are 2.50% of weekly net average assets and has an exit load of 1% if you exit within one year of allotment.