SBI Magnum Balanced Fund: Rides market cycles with aplomb

Is the fluctuation in stock prices worrying you? Investing in balanced funds with a good track record may be a good option.

SBI Magnum Balanced Fund is a good choice as it has actively managed both its equity and debt portfolios to outperform the category.

The scheme’s mandate allows it to invest up to 50 per cent of its assets in debt and money market instruments. But in practice, the fund has maintained 24-25 per cent of its allocation to debt instruments with a 65-70 per cent equity exposure.

This mix allows investors to avail of tax benefits accorded to equity-oriented funds. As of November 30, about 72 per cent of the scheme’s assets were invested in equities and 25 per cent in G-Secs and corporate debt instruments.

The fund’s three- and five-year returns of 19 per cent and 12 per cent are ahead of the category average of 14 and 10 per cent respectively.

Smart juggling On the equity portion, the scheme’s ability to juggle between large, mid and small-cap stocks has spiced up returns. In the last two years, SBI Magnum Balanced has upped its exposure to mid- and small-cap stocks; to more than half its equity holding. The fund’s NAV rose 83 per cent between August 2013 and January 2015.

This is higher than the 69 per cent gain clocked by Nifty during the same period.

The fund’s performance has improved in the past year. Its ability to pick winners in the equity space boosted the scheme’s NAV. For instance, stocks such as Ramakrishna Forgings, Sanghvi Movers and Atul have delivered multi-fold gains over the last two years and this provided a boost to the scheme’s performance.

On the debt side, the fund has taken active advantage of both interest rate and credit opportunities. The debt portion features a mix of long-duration G-Secs and corporate bond exposures across the credit spectrum.