The broader markets are still volatile and corporate profits are still gyrating. Given the circumstances, investors may be wary of mid- and small-cap stocks. Funds that focus on steadier large-caps may be a good option for investors with a moderate risk appetite in the current environment.

SBI Magnum Equity (Magnum Equity) is an investment-worthy large-cap fund with a long track record. It has improved its performance significantly over the past four-five years.

The fund has managed to outpace its benchmark Nifty over three- and five-year timeframes. The extent of out-performance has been to the tune of 1.5-3 percentage points.

Over the last five years, Magnum Equity has delivered compounded annual returns of 19.9 per cent, which places it in the top quartile of funds in its category, ahead of its peer schemes, such as Franklin India Bluechip, DSPBR Top 100 Equity and IDFC Equity.

The fund takes a concentrated approach to stocks, which makes it a tad risky. But such exposure is normally taken in the stable index names.

SBI Magnum Equity may be a good option for investors with a longer investment horizon of at least five years and who are looking for steady, rather than spectacular, returns. The scheme could be a suitable diversifier to one’s portfolio.

SBI Magnum Equity was a middle-of-the-road performer prior to 2008-09.

But over the past four-five years, it has managed to catapult itself to the top quartile by latching on to the right set of sectors.

Portfolio and strategy The fund takes high exposure to individual stocks, at times above 7 per cent.

In its recent portfolio, the top 10 stocks account for nearly 59 per cent of the overall pie.

But the stock picks are mostly from the Nifty basket and hence offer some amount of stability. Banks and financial services have always figured prominently in the fund’s portfolio.

Software and energy, too, are among the top sectors invested in. The fund has increased exposure to automobiles in recent times. Some of these sectors have had a rough run this past year and are attractively valued but may rally well if the economy picks up.

SBI Magnum Equity has managed to contain volatility during market corrections by increasing the proportion of cash and debt holdings in the portfolio. For example, during the 2011 correction, the fund held cash and current assets to the tune of 12 per cent of the portfolio.

With a track record of over 20 years, the scheme can be considered for predictable returns.

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