The Hindu Business Line : Magnum Multiplier Plus: Invest

AN investment can be considered in SBI Magnum Multiplier Plus, as the fund's impressive streak has continued for the past couple of years. This has started to improve the returns even for investors who were early entrants to the fund. It had been one of the laggards for several years, but has picked up its performance during the bull market since April 2003.

Its returns have outpaced those of the benchmark indices as well as a host of diversified funds by a long margin. Its performance in the choppy market of 2005 has been noteworthy. The NAV has risen about 30 per cent in the third quarter after a steady showing in the first six months of this year.

The fund now sports annual returns of about 65 per cent over the past three years and now figures among the top 20 equity funds in terms of returns over this period.

Exposures may be considered using a systematic investment plan over a 12-month period. This will ensure that investors do not lock in a large sum at one price point. They may also benefit from any weakness in the broad market by adopting such an approach.

If you have exposures in funds such as Magnum Contra, HDFC Tax Saver, Franklin Prima, HDFC Top 200 and Reliance Growth, you could consider adding this fund to your portfolio as a diversification option. That the fund has a compact portfolio of 20 stocks is a positive; this is a small number considering that it has an asset base of about Rs 400 crore.

In this respect, its investment strategy differs from a host of funds that have an asset base in excess of Rs 300 crore. The strategy has paid rich dividends, as the fund has benefited from concentrated exposures to a few good investment ideas. But the portfolio also allows for a high degree of diversification.

The portfolio appears well positioned to capitalise on the growth themes in the economy with its mix of nascent large- and mid-cap stocks. The tilt towards engineering, construction, cement, frontline IT and banking sectors is good as these may be rewarding themes over the next year or two.

The stock selection within these themes also inspires confidence, as the fund has focussed on the superior plays. As it has been an early entrant into such key holdings as Thermax, Nagarjuna Construction, United Phosphorus and Crompton Greaves, it has benefited from gains in these stocks.

Exposures such as Mahindra & Mahindra, Kotak Mahindra Bank, Gujarat Ambuja Cement, Blue Dart and Cipla may help the fund maintain the momentum in its performance.

Suitability: The risks associated are in line with those of a diversified equity fund. The returns have more than adequately compensated for the risk element.

Fund Facts: This fund was launched in January 1993. The minimum investment is Rs 1,000. There is an entry load of 2.25 per cent. There is no exit load. The fund manager is Mr Sandip Sabharwal.

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