Stellar performer slips

SBI Magnum Global Fund 94 was launched in 1994 and is a veteran in the Indian mutual fund industry. It is recognized as one of the best schemes across timeframes.

The investment objective of the scheme is to provide investors maximum growth opportunities through investments in Indian equities, partially convertible debentures, fully convertible debentures and bonds.

The scheme was not in limelight until late in 2003 when the scheme was restructured and it was made a mid-cap oriented scheme. The scheme has delivered 17.15% compounded annualised (CAGR) returns since inception, while its benchmark (BSE 100) delivered 12.15% in the same period.

The scheme has consistently been among the top three performers in the last five years. It returned a CAGR of 63.86% (benchmark index’ returns were 42.55% and the peer group gave 48.35%) in the 5-year period and 46.51% (benchmark 38.86% and peers 37.55%) in the last three years.

However, in the past one year, the scheme has delivered 24.12% and has trailed its benchmark (38.43%) and peers (35.02%).

It has been noticed that there has been a change in the fund management twice over the past one year. At present, the scheme is jointly managed by Vivek Pandey and Ritesh Sheth. They replaced Gopal Agarwal who managed the fund for five months.

Currently the scheme manages a corpus of Rs 1753.33 crore. It has seen a considerable increase in assets over the past two years.

As of January 2008, 97.75% of the scheme’s funds been allocated to equities and the rest is in cash and equivalent. On an average, over the past two years, the scheme has allocated 86.77% of its assets in equities, 2.33% in debt and the rest is in cash and equivalent.

Though the scheme has a huge exposure to mid-cap companies, it has well diversified portfolio with exposure to 67 stocks with no holding accounting for more than 5.5% of the total net assets. The scheme’s investments are spread across 26 sectors with the top 5 sectors comprising over half the portfolio.

The scheme is highly bullish on the construction sector and it accounts for 19.12% of the net assets.  The scheme is also bullish on steel.

The scheme seems to follow the buy and hold strategy which has helped it reap benefits in the long term as mid-cap stocks require time to appreciate and produce above-average returns.

The scheme has huge investments in the mid-cap space. Mid-cap companies are riskier and tend to be edgy when the markets are volatile but have great potential to generate above average returns in the long term.

By arrangement with mutualfundsindia.com, a unit of Icra Online