The Hindu Business Line : Magnum Balanced Fund: Invest

Magnum Balanced Fund appears to be a reasonable investment option for investors who prefer a mixture of equity and debt. Its five-year track record is impressive, with returns of about 40 per cent being well ahead of the category average. The fund has consistently outpaced its category average for the past three and five years. However, a substantial hit during the recent 2008 correction resulted in the fund’s one-year return trailing the category average. Investors can consider investments in the Magnum Balanced Fund as a diversification option.

Magnum Balanced Fund has traditionally been a more aggressive fund within the balanced category, with relatively high equity exposures and several mid- and small-cap stocks among the equity holdings. The fund’s equity exposure, which hovered at 77 per cent levels in late 2007, has since declined and is now at 70 per cent.

Performance: While the long-term track record is impressive, the fund generated a return of about 8 per cent over the past year and trailed the benchmark Crisil Balanced Index by 6 percentage points. Funds such as DSPML Balanced Fund have fared much better in this period. Magnum Balanced Fund’s exposures in construction, refinery and engineering could explain its recent performance.

The fund has not fared well during the recent corrective phase, shedding 23 per cent, or more than the category on a year-to-date basis. On a rolling return basis, in the past 24 months, the fund trailed the benchmark about 50 per cent of the time. Its strategy of holding 45 per cent of equity in large-cap and the rest in mid- and small-cap stocks, steps up the risk profile.

Portfolio Overview: The fund has 39 stocks in its latest equity portfolio and the top ten account for 29 per cent of the assets. Close to 30 per cent of the assets were held in debt and cash. In debt, the fund invested mostly in short-term instruments.

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