In the year so far, SBI Magnum Global delivered a return of 4.2 per cent while its benchmark, the CNX Midcap index, has dropped 9.7 per cent. It features in the top quartile of funds with a mid-cap orientation.

The fund also features select large-cap stocks. With several mid- and small-cap stocks having missed out on this year’s selective run-up in large-cap stocks, there’s potential for good gains once the broader market picks up hereon. The fund’s picks are generally stocks that tend to have sound fundamentals.

The fund, though, flits quickly between sectors, and performance relies on the ability to spot trends well ahead of time. In its long history (it was established as a close-ended fund in early 1994), the fund has had an uneven track record. Still, good performance over the past couple of years and an attractive current portfolio work in its favour now. Its mid-cap tilt also heightens the risk.

Therefore, the fund suits investors who can tolerate more risk. Small amounts through the SIP route can be allocated to this fund, to add a kick to overall portfolio returns.

Performance The fund changed its benchmark from the BSE100 to the CNX Midcap in April 2011, the latter being better suited for the fund’s mid-cap leaning. Over the one-, three- and five-year timeframes, it has beaten the Midcap index by a significant margin of 10 to 15 percentage points.

The fund faltered in the 2008-09 bear market, losing almost five percentage points more than the benchmark. Much of 2009 was also spent under-performing the benchmark. However, 2010 marked a turnaround in performance.

The fund’s manager also changed in mid-2009. During both the 2011 downturn and the 2012 uptick, the fund stayed ahead of the CNX Midcap index. On an annual rolling return basis for the past five years, the fund has beaten the benchmark a reasonable 75 per cent of the time.

Portfolio Over the past few years, mid-cap stocks constituted between 58 and 79 per cent of the portfolio. The share of large-cap stocks ranged 12 to 26 per cent. The fund has taken some well-timed calls on stocks, such as Page Industries, MRF, Redington India, Gillette India, Blue Dart Express, IPCA Labs, Emami, Wockhardt and HPCL. It also moves swiftly between sectors, with top sector holdings changing fairly frequently.

Its latest portfolio has auto ancillaries as the top sector, represented by Amara Raja Batteries, Motherson Sumi and Bosch. Pharmaceuticals was the top holding at the start of the year. Sectors where the fund has built up presence recently include capital goods, which are relatively under-valued, software and tyres which hold good potential.

Related Topics