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Investors who are content with their fund outpacing its benchmark can continue to stay invested in SBI Magnum Multiplier Plus 1993. The fund, over a five-year period, clocked compounded annualised return of 15.3 per cent and outpaced its benchmark BSE 200 by two percentage points and bettered its mutlicap peers by a percentage point. However, selection of stocks and sectors has somewhat let down the fund and dragged performance marginally.
With markets passing through a highly volatile phase, funds that invest in high growth stocks across market cap segmentsmay underperform or fail to compensate for the risks undertaken. The fund lost more than the category average both during the 2008 downturn as well as on a year-to-date basis in 2011 suggesting that its ability to manage downturns/volatility is limited.
Magnum Multiplier'sstrategy to stay fully invested in equities irrespective of the market movement may also not always be beneficial although it helps during a bounce-back from a downturn. Given the bouts of mixed performance of the fund in recent periods, it may be worth while to wait and watch performance before committing fresh investments.
Performance : The fund's one-year performance not only trailed its category peers, but also equally underperformed its benchmark. Over a year, the fund generated a return of 1 per cent against 4.7 per cent clocked by its benchmark.While exposure of close to 30 per cent in mid and small-cap stocks dragged its one-year performance, lower beta of stocks could mean that the fund may contain losses better. The last three months have, in fact, seen the fund tackling declines well.
Portfolio overview : The fund had 38 stocks in its May portfolio with 44 per cent of the assets concentrated in the top ten stocks. The top three sectors, namely banks, consumer goods and IT together accounted for 50 per cent of the portfolio.
Within the banking space, high exposure to underperforming public sector banks could have partially dragged its one-year performance. Similarly, the other stocks that pulled down the portfolio over the past six months were Thermax, Infosys, Karnataka Bank and PTC. The fund's lower portfolio turnover implies that it holds conviction in the stocks selected despite its underperformance. The fund is managed by Mr Jayesh Shroff.
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