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Magnum Multiplier Plus: Hold

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Suresh Parthasarathy

Investors can retain their investments in Magnum Multiplier Plus 1993 given its inspiring performance over three-year and five-year spans. Over these time-frames, the fund generated returns of 50 per cent and 45 per cent respectively, and outpaced its benchmark BSE-100 by 17 per cent and 12 per cent. The fund has a bias for large-caps, while close to 20-25 per cent are invested in mid-cap stocks with market capitalisation less than Rs 5,000 crore.

The fund has a tendency to take concentrated bets in sectors and capital goods appears to be the top choice for more than a year now, with an average exposure of close to one-fourth of the assets. Over this period the fund's return has not compensated for the risk taken (in terms of concentrated exposure to capital goods). However, its long-term performance record and the current stock picks inspire confidence; a hold strategy, therefore, appears appropriate.

Suitability

: The fund is suitable for aggressive investors who prefer to take concentrated bets on a few sectors. Investors who hold this fund as part of their core portfolio can consider moving a part of their investment to Magnum Contra, which has consistently outperformed the market and remains a recommended pick.

Performance

: Magnum Multiplier Plus returned 24 per cent for one year till May 22 and trailed the benchmark by 6 percentage points. That the fund has gone through volatility is evident from the performance of its systematic investment plan. The return through SIP for one year till April 2007 was 17 percentage points higher than that generated by lump-sum investments in the same period. Clearly, the SIP has emerged a better option for this volatile fund.

Portfolio Overview

: Magnum Multiplier Plus has concentrated exposure to sectors such as capital goods, automobile and construction. Together, their weight in the portfolio is over 50 per cent. Stock-specific exposure went up to nine per cent and the top ten stocks accounted for close to 52 per cent of the assets. Though capital goods outperformed the market, the fund's higher exposure to auto has dragged down returns.

The fund's NAV grew 12 per cent for the year ended April 2007 while the asset size increased only 6.5 per cent, from Rs 746 crore to Rs 794 crore. This indicates that the fund may have witnessed pull-outs during the period.

Fund facts

: Magnum Multiplier Plus was launched as a close-ended scheme in 1993 and later made open-ended. The fund is jointly managed by Mr Sanjay Sinha and Mr Jayesh Shroff.

(This article was published in the Business Line print edition dated May 27, 2007)
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