Mutual Funds

SBI Magnum Multiplier: The best of both worlds

K Venkatasubramanian | Updated on April 08, 2018 Published on April 08, 2018

The fund’s large-cap exposure gives stability, while mid-caps spice up its returns

If you are looking for a fund that takes moderate risk, invests in stocks across market capitalisation and consistently beats its benchmark to deliver above-average returns, then SBI Magnum Multiplier is a perfect fit.

Investors who prefer the stable returns given by large-cap stocks while also wanting a kicker from broader market (mid-cap) rallies, could buy units of the fund. The scheme has been around for more than 25 years and has delivered nearly 15 per cent annually over this period.

Over one-, three- and five-year timeframes, it has beaten its benchmark, BSE 200 TRI (Total Return Index). The outperformance vis-à-vis the benchmark has been to the tune of 3-4 percentage points over the long term.

In the last five years, the scheme has delivered compounded annual returns of nearly 21 per cent, placing it ahead of several quality peer funds. Over the long term, the fund has done better than Kotak Opportunities, UTI Opportunities, Franklin India Flexi Cap and L&T Equity.

The fund invests mainly in large-cap stocks, with 75 per cent of its portfolio being allocated to well-known names.

Though SBI Magnum Multiplier may not be a chartbuster in its category, it nonetheless has stayed in the top quartile of the multi-cap fund universe over five-, seven and 10-year timeframes.

SBI Magnum Multiplier takes lower risks, without compromising too much on returns.

It has been able to maintain a balance between defensive and cyclical sectors. The scheme has participated well in the rallies over the past few years, while also being able to contain downsides well in correcting markets. Investors with a moderate risk appetite can buy units of the fund through the systematic route, with a horizon of at least five to seven years. The direct plan will entail lower charges (1.65 per cent).

Large-cap bent

Most of its top picks are from the Nifty or the BSE 100 basket. But some quality names such as Jubilant FoodWorks, M&M Financial Services and Shriram Transport too figure among the main holdings of the portfolio. These stocks, which rallied extensively over the last few years, aiding the fund’s outperformance.

SBI Magnum Multiplier has had defensives such as consumer non-durables and pharma in its portfolio consistently.

Banks have generally been the most favoured segment. Over the last one year, the fund increased exposure to sectors such as capital goods and telecom, as economic growth gathered pace. As crude oil prices spiked, it reduced stakes in petroleum stocks. It has also trimmed exposure to cement stocks in light of their expensive valuations.

SBI Magnum Multiplier does not take concentrated exposure to individual stocks. With a portfolio of 45-50 stocks, the fund is well-diversified, with diffused exposure across sectors. This fund can be relied upon to deliver stable (but not spectacular) returns and would be a good addition to the portfolios of investors with a medium risk appetite.

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Published on April 08, 2018
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