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SBI Magnum Multicap has been steadily outperforming its benchmark index, S&P BSE 500, ever since it turned around in 2012, after its lacklustre performance in preceding years.
With markets on a roll, investors with the stomach for volatility could consider multi-cap funds that invest in stocks across market capitalisation. SBI Magnum Multicap, with a relatively higher exposure to mid- and small-caps, is a good bet for investors with a perspective of more than five-years and moderate appetite for risk.
In the last five years, the fund has delivered 19.3 per cent annually, outperforming its benchmark by 5 percentage points. Over one-, three- and five-year periods, the fund has beaten the S&P BSE 500 by 3-10 percentage points.
The fund ranks in the top quartile among its category over three- and five-year periods. Furthermore, it has outdone its peers, namely Mirae Asset India Opportunities, ICICI Pru Multicap and Reliance Equity Opportunities across these time-frames. Over the last one year, though, the fund falls in the second quartile among its category, and has delivered 28 per cent returns, higher than the benchmark return of 25.3 per cent.
The scheme allocates about 40 per cent of its portfolio to mid- and small-cap stocks.
Although this slightly increases the risk, taking active debt and cash calls whenever the markets are choppy somewhat mitigates the risk. For instance, when the markets were very volatile last July and August, the fund increased its debt and cash positions.
Moreover, it recently increased its cash position to 3.8 per cent. As the BSE 500 index is trending new highs, investing through the systematic investment plan (SIP) route could be a better option to ride out market volatility.
Strategy and portfolioEven after the stellar performance of mid-caps over the last one to two years, these stocks continue to outperform large-caps. SBI Magnum Multicap’s relatively higher exposure to mid-caps could help spice up returns. Besides, the fund has stuck with some sound blue-chips such as HDFC Bank, SBI, Tata Motors, Maruti Suzuki and Nestle India, which lends comfort.
The fund has added gas and non-ferrous metal sectors to its kitty in the last one year. Banks, finance and software are the top preferred sectors and in the last one year the fund has almost doubled its allocation to the finance sector. On the other hand, it has reduced its exposure in transport, industrial capital goods and healthcare services sectors.
The scheme has exposure to more than 60 stocks. The top 10 stocks account for about 34 per cent of its portfolio, indicating a diffused approach. Allocation towards individual stocks is limited to 5 per cent, barring a few exceptions.
The top three sectors account for 46 per cent of the portfolio.
While the fund exited some of the blue-chip stocks such as Reliance Industries, Axis Bank and Britannia Industries over the last one year, it added stocks of Tata Motors, Nestle India, Mahindra & Mahindra Financial, Equitas Holdings and Indian Oil Corporation, which have been performing well.
Bajaj Finance, Titan Company, Adani Ports and Hindustan Petroleum have delivered good returns over the last one year.
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