The Hindu Business Line : Magnum Multiplier Plus: Hold

The traditional mandate of the diversified equity funds is to remain invested in equities at all times. Those who strictly followed the mandate and remained fully invested over the past year have seen their NAVs lose substantial value. Funds that moved into cash in the early part of this ongoing correction have fared far better as they have managed to shield a part of their portfolio from further erosion.

Magnum Multiplier Plus moved a portion of its assets into cash to protect from downside. The fund managed a subdued performance this year on the back of sizable exposure to stocks with market capitalisation of less than Rs 7,500 crore. However, due to a higher cash position, the fund has contained the downside better than the benchmark BSE 100 over the same period. The fund’s track record over a five-year time horizon remains good and the return over the same time frame places it among the top ten diversified equity funds. Based on the fund’s long term performance, holding investments may be an appropriate strategy under the present market conditions.

Suitability: The fund has a mandate to invest across the market capitalisation segments. Its strategy of taking concentrated exposures to a few sectors increases its risk profile vis-À-vis a large cap diversified fund. The fund is suitable for investors willing to assume additional risk to enjoy the benefit of portfolio with a flexi cap approach.

Performance: The fund has generated a compounded annualised return of 11.5 per cent since its inception from 1993. The one-year return is a negative 50 per cent and the fund has fared better than the benchmark to the extent of two percentage points. In the past two years, the fund’s performance has not been consistent, with the fund trailing the benchmark on a majority of occasions.

Portfolio overview: The fund had 39 stocks in its September portfolio and half of the assets were invested in stocks with market capitalisation of less than Rs 7,500 crore. The top ten stocks accounted for 44 per cent of the assets and sectors such as capital goods, financial and construction have cornered one half of the equity allocation. The fund has not cut its holdings in construction stocks despite some of them having lost close to 70 per cent. The fund preferred to adopt a buy and hold strategy. The NAV per unit is Rs 39.9.

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