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Aarati Krishnan

INVESTORS in the SBI Magnum Multiplier Plus scheme (MMPS) can book profits on part of their holdings to lock into the impressive gains over the past year.

Reversing its disappointing run of the preceding years, MMPS generated 103 per cent returns over the past year.

The recent performance has been in line with funds with a good long-term track record such as HDFC Taxsaver, HDFC Equity Fund and HDFC Top 200 Fund. For those looking to make fresh investments in an equity fund, it may be better to watch the fund's performance over two or three market cycles before taking fresh exposures.

Suitability: MMPS was repositioned as an aggressive growth fund targeting above-average returns from its equity portfolio.

Since the fund regularly allocates about a third of its assets to mid/small-cap stocks, its risk profile is higher than that of funds focussed purely on large-cap stocks. It may, thus, make sense for investors to adopt an active approach to profit-booking in the fund.

Performance: After figuring among the top-performing equity funds in 1999, returns on the MMPS took a big hit in the technology stock collapse of 2000. In restructuring mode, the fund's performance trailed that of the index in each of the subsequent three years to 2002.

During this period, the fund appears to have put in place specific ceilings on stock and sector concentration. MMPS has made a comeback in 2003, with its NAV doubling over the past year. The performance in the last one year matches that of several other diversified funds with a good long-term track record.

The fund invests a sizable part of its portfolio in mid/small cap stocks. It has, for instance, made an early entry into such mid-cap stocks as Balrampur Chini Mills, GMDC and Welspun Gujarat.

But it has also picked stocks of a riskier genre, such as Cosmo Films, Wimco and Jindal Drilling , which were part of the October 2003 portfolio. Exposures to such stocks have, however, usually been restricted to less than 5 per cent of the assets.

The fund's performance in the recent times has been heartening. But it may be prudent to wait for consistent performance over two or three market cycles before making fresh investments in the fund.

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