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Aarati Krishnan

INVESTORS can use the recent improvement in its performance to book profits on part of their holdings in Magnum Global Fund. The fund, which went through a bad patch in 2000 and 2001, appears to have recovered over the past year.

The fund has focussed on mid-cap and small-cap stocks to deliver its recent out-performance of the indices. Investors who own just a couple of funds in their portfolio should probably go for other diversified equity funds with a more consistent five-year record. Investors with small portions of their portfolios parked in Magnum Global Fund, can, however, hold on to their units.

Suitability: Magnum Global Fund, which earlier invested in a mix of large and mid-cap stocks has, over the past year, switched almost completely to mid and small-cap stocks. The performance has benefited from the sharp mark-up in valuations of mid-caps over the past year.

The mid-cap focus may also bring greater volatility to the fund's performance over the long term and pegs up its risk profile. The fund may be suitable only for investors who can take an active approach to investing and have an above-average risk appetite.

Performance: Magnum Global Fund suffered a sharp setback in the market reversals of 2000 and 2001, trailing behind indices such as the Nifty and Sensex. Its performance, however, registered a turnaround in late 2002 and the fund has significantly outpaced the indices since 2003.

The fund has also handled the decline in equity values since December 2003 very well.

Returns of about 103 per cent over the past year have helped the fund climb to the top of the return rankings for diversified funds for one year.

However, this turnaround in performance has come with a significant shift in the fund's portfolio strategy.

The top holdings are now made up entirely of mid-and small-cap stocks. In September 2003, the top five holdings were liquid large-caps such as ITC, Bajaj Auto, Reliance, Tata Motors and Digital Global.

But all these stocks have been weeded out of the portfolio since then and the fund is now a pre-dominantly mid-cap fund featuring United Phosphorus, Thermax, Man Industries, Mphasis BFL and Gujarat NRE Coke as its top holdings.

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