SBI Magnum Multiplier Plus: Buy

Investors who prefer the stability in returns given by large-cap stocks, while wishing to also gain from broader market rallies, can consider buying the units of SBI Magnum Multiplier Plus. Over one-, three- and five-year timeframes, it has beaten its benchmark – BSE 200 and also its category.

The outperformance vis-à-vis the BSE 200 has been 5-7 percentage points over the long term. The fund invests mainly in large-cap stocks. Exposure to mid-caps is around 20 per cent of its portfolio. In the last three years, it has delivered 23.2 per cent returns annually, placing it in the top quartile of funds in its category over this period.

Over the long term, the fund has done better than Kotak Opportunities and Birla Sun Life Equity. Its performance in recent years compares favourably with quality names such as Franklin India Prima Plus and Birla Sun Life Frontline Equity. With a blend of stocks tilting towards quality names, SBI Magnum Multiplier Plus carries lower risks, without compromising too much on returns.

It has been able to maintain a balance between defensive and cyclical sectors. The scheme participated well in the rallies over the past few years (2012, 2013-14), while also being able to contain downsides well in the correcting markets of 2011.

Investors with a moderate risk appetite can buy units of the fund through the systematic route, with a horizon of at least five years. SBI Magnum Multiplier Plus does not take concentrated exposure to individual stocks. Exposure to even to its top holdings is less than 5 cent of the portfolio, making it a safe bet.

Most of its top picks are from the Nifty or the BSE 100 basket. Some quality mid-cap names such as Blue Dart, Pidilite Industries, Bajaj Finance and UPL too figure in the portfolio and these stocks have played their part in the fund’s outperformance. The scheme also maintains cash and debt position to the tune of 5 per cent of its portfolio across market cycles. SBI Magnum Multiplier Plus took to defensives such as pharma, software and consumer non-durables in 2013 as markets turned volatile.

Banks have generally been the most favoured segment. Over the last one year, as the signs of economic recovery and a stable government came through, the fund increased exposure to automobiles, auto ancillaries and cement, while reducing exposure to pharma and to a minor extent in software as well.

With a portfolio of over 50 stocks, the fund is well diversified, with diffused exposure across sectors. Invest in it for above-average returns over the long term, without having to take very high risks.