SBI ESG Exclusionary Strategy Fund

SBI ESG Exclusionary Strategy Fund has delivered a 10Y SIP XIRR of 14.21% and 5Y XIRR of 13.89%, consistently outperforming the NIFTY 50 on a lump-sum basis across all periods (e.g., 12Y Fund CAGR of 12.37% vs benchmark 9.79%). However, it lags the sectoral/thematic category average SIP XIRR across every horizon, trailing by roughly 2.4-3.1 percentage points (e.g., 5Y: 13.89% vs 16.95%). The fund's 1Y XIRR of 16.23% does beat the category average of 14.1%, suggesting recent relative improvement.

The fund exhibits defensive characteristics with a beta of roughly 0.95 and downside capture consistently around 92-93%, meaning it falls less than the NIFTY 50 in declining markets. Positive alpha across all periods (ranging from 1.50% to 5.41%) indicates genuine risk-adjusted outperformance versus the benchmark. Calmar ratios of 0.37-0.42 across horizons reflect a stable return-to-drawdown profile, though 8 drawdown events exceeding 10% confirm meaningful interim volatility.

The portfolio is heavily weighted toward financials, with Banks alone comprising 28.4% of NAV and the top 10 holdings including five banks or financial companies led by ICICI Bank (8.9%) and HDFC Bank (7.37%). With 43 total holdings, diversification at the stock level is reasonable, but sector concentration in banking exposes investors to financial sector cyclicality. Remaining allocations to Automobiles (7.1%), IT (6.5%), and Consumer Durables (5.5%) provide moderate spread across other sectors.

Compared to sectoral/thematic peers, the fund underperforms on SIP XIRR across 3Y, 5Y, 7Y, 10Y, and 12Y horizons, with gaps of 2-3 percentage points against category averages. Its calendar year returns show consistency in positive years (e.g., 25.13% in 2023, 30.89% in 2021) but modest gains in weaker years like 2025 (7.53%) and 2022 (-2.9%). The fund's ESG exclusionary mandate likely constrains it to large-cap quality names, which explains steadier but lower-octane returns than typical thematic peers.

This fund suits conservative-to-moderate equity investors seeking a large-cap-quality, ESG-screened core holding rather than aggressive thematic exposure. A minimum horizon of 5-7 years is appropriate, as the fund's outperformance versus the benchmark compounds meaningfully over longer periods (12Y alpha of 2.75%). Investors should tolerate moderate drawdowns and accept category-lagging returns in exchange for lower downside capture and a defensive portfolio tilt.

• Consistent positive alpha versus NIFTY 50 across all measured periods, from 1.50% (10Y) to 5.41% (1Y)
• Low downside capture of 92-93% with beta near 0.95, offering meaningful cushion in market declines
• Long-term SIP XIRR of 14.21% over 10 years with stable rolling returns averaging 14-14.5% across windows

• Underperforms the sectoral/thematic category average SIP XIRR by 2-3 percentage points across most long-term horizons
• Heavy sector concentration in Banks at 28.4% of NAV creates vulnerability to financial sector downturns
• Expense ratio of 1.37% is relatively high for a large-cap-oriented ESG strategy