Fund Pick: Diversified outperformer

SBI Magnum Multicap has featured in the top 30 percentile over the past eight quarters

Launched in September 2005, SBI Magnum Multicap Fund is classified under the equity diversified category of CRISIL Mutual Fund Ranking. It has featured in the top 30 percentile (CRISIL Fund Rank 1 or 2) over the past eight quarters as of September 2016. The fund's quarterly average assets under management (AUM) are at Rs 1,291 crore in December 2016. The fund is managed by Richard D'Souza.

The fund aims to provide investors with opportunities for long-term growth in capital, along with the liquidity of an open-ended scheme. This is achieved through an active management of investments in a diversified basket of equity stocks spanning the entire market capitalisation spectrum and in debt and money market instruments.

Consistent outperformance

Over the past five years, the fund outperformed the benchmark BSE Sensex index and its category (funds ranked under the equity diversified category in September 2016 CRISIL Mutual Fund Ranking) across all time frames under analysis. The scheme posted 23.25 per cent three-year annualised returns, outperforming the category's 19.31 per cent and the benchmark's 10.00 per cent.

 During the Post European crisis (July 2013-February 2015), the fund outpaced the benchmark and the category generating 43.38 per cent annualised returns, compared to the category's 43.12 per cent and the benchmark's 32.42 per cent. It continued to perform well during the recent Chinese slowdown and delivered positive annualised returns of 6.77 per cent per annum, in contrast to the benchmark's -1.03 per cent. An investment of Rs 1,000 in the fund on September 29, 2005, (inception of the fund) would have more than tripled to Rs 3,632 on January 5, 2017, at invested in the benchmark would have paid Rs 2.37 lakh at 9.35 per cent.

Portfolio analysis

The fund's portfolio is composed of 63 stocks from 26 sectors as of November 2016. The top 10 stocks formed 35.23 per cent of the fund's equity portfolio in November 2016. The portfolio is well diversified at the stock level as suggested by average 55 stocks held by the fund in the past three years.

Over the past three years ended November 2016, the top five sectors, on average, constituted 54.10 per cent of the portfolio, which indicates substantial sectoral concentration. Over this period, banks, on average, had the highest exposure of 17.03 per cent followed by software (11.06 per cent), consumer non-durables (9.41 per cent), finance (7.82 per cent) and pharmaceuticals (7.69 per cent).

The fund has consistently held eight stocks for the past three years, from its investment universe of 135 stocks, which suggests the fund manager deploys active churn. Top holdings among the consistently held stocks include Infosys, State Bank of India, Tata Consultancy Services, Axis Bank and Kotak Mahindra Bank.