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Aarati Krishnan

SBI's Magnum Balanced Fund has sharply improved its performance over the past year with returns of about 90 per cent over this period. But the long-term track record is inferior to that of balanced funds such as HDFC Prudence Fund.

Like other balanced funds, the fund has also under-performed a strategy of directly investing in a mix of equity and debt funds with a good track record. Given the recent improvement in performance, investors can retain units.

However, those making fresh investments may consider routing their investments through a Fund of Funds, ahead of a balanced fund.

Suitability: Its asset allocation pattern makes Magnum Balanced Fund an aggressive option within the universe of balanced funds. The fund's equity exposure has hovered between 65 and 70 per cent over the past year, which pegs up its risk profile compared to funds which park 60 per cent or less in equities.

Performance: The fund's returns of 90 per cent over the past year compare well with the majority of balanced funds in operation. HDFC Prudence Fund, the balanced fund with the best five-year track record, notched up a similar return over the year. However, returns on Magnum Balanced Fund compare unfavourably with those of HDFC Prudence over a three and five-year period. Against a compounded annual return of 14 per cent on Magnum Balanced Fund, HDFC Prudence has returned 28 per cent over the past five years. This can largely be traced to the sharp setback suffered by the fund in the market reversals of 2000 and 2001.

In terms of asset allocation, the allocation to equities has swung between 65 per cent and 69 per cent; the fund appears to have re-balanced its exposures when equities edged past the 70 per cent mark. The fund's equity portfolio is spread thin across a range of sectors without any bias to a particular sector.

About 15-20 per cent of the assets have been invested in mid-cap stocks, with stocks such as Pantaloon Retail, Kotak Mahindra Bank, Hotel Leela Venture and Nahar Spinning figuring in the portfolio. The debt portfolio is well diversified, but is invested mainly in corporate debt.

: Magnum Balanced Fund was initially launched as Magnum Open End Fund in 1995. The fund is managed by Mr Sachin Sawrikar and manages assets of Rs 88 crore. The fund levies an entry load of 1.75 per cent. <137>

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