Fund pick: SBI Magnum Midcap Fund

Good show on a diversified base

Launched in March 2005, SBI Magnum Midcap Fund is classified under the small- and mid-cap category of CRISIL Mutual Fund Ranking. It has been ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) over the past five quarters ended June. Managed by Sohini Andani, its quarterly average assets under management (AUM) stood at Rs 2,512 crore at the end of the September quarter.

The fund aims to provide investors opportunities for long-term growth in capital, along with the liquidity of an open-ended scheme by investing predominantly in a well-diversified basket of equity stocks of mid-cap companies.

Superior performance

Over the past five years, the fund has constantly bettered the category (funds ranked under the small- and mid-cap category in June 2016 CRISIL Mutual Fund Ranking) and the benchmark -Nifty Midsmall 400 Index - across all time frames under analysis. The recent three-year performance was particularly notable, with annualised return of 42.38 per cent compared to the category's 39.03 per cent and the benchmark's 33.24 per cent.

The fund has delivered higher returns than the category and benchmark since the European crisis (January 2010-June 2013). Even, during the ongoing Chinese slowdown (March 2015-September 2016), it delivered 16.40 per cent annualised returns, while the category and the benchmark posted corresponding figure of 11 per cent and 9.8 per cent, respectively.

An investment of Rs 1,000 in the fund on April 15, 2005, (inception of the benchmark) would have grown more than seven times (to Rs 7,092) at an annualised rate of 18.64 per cent on September 27. A similar investment in the category and the benchmark would have grown to around Rs 6,722 (18.09 per cent) and Rs 5,170 (15.41 per cent), respectively.

Similarly, Rs 1,000 invested per month in the fund over the past 10 years through systematic investment plan totaling Rs 1.2 lakh would have grown to Rs 3, 42,563 by September, 27 at 19.93 per cent annualised return. In comparison, a similar amount invested in the benchmark would have given return of Rs 2, 56,474 at 14.55 per cent.

Portfolio analysis

As of August 2016, the fund had exposure to 53 stocks across 20 sectors. In this month, the top 10 stock holdings formed 35.70 per cent of the total equity portfolio.

Over the past three years ended August, the top five sectors, on an average, constituted 55.18 per cent of the fund's portfolio. Over this period, the pharmaceuticals sector, on an average, had the highest exposure of 14.26 per cent followed by industrial products (12.70 per cent), finance (11.15 per cent), pesticides (7.13 per cent) and consumer non-durables (5.85 per cent).

The fund has consistently held 11 stocks for the past three years, with an average exposure of 26.25 per cent of the total equity portfolio. Top holdings among the consistently held stocks include Page Industries, Swaraj Engines, DB Corporation, Carborundum Universal and Cholamandalam Investment and Finance.

CRISIL Research