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SBI Magnum Multicap Fund: One of the top performing diversified mutual funds

Mutual Funds

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Mutual Funds article in Advisorkhoj - SBI Magnum Multicap Fund: One of the top performing diversified mutual funds
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SBI Magnum Multicap Fund was launched 12 years back in September 2005. If you had invested Rs 100,000 in the scheme when it was launched, then its investment value now would have been around Rs 4.56 lakhs. The fund gave absolute return of 356%.

The performance of this scheme in the last 5 years has been particularly quite strong. SBI Magnum Multicap Fund (Regular Plan Growth) gave nearly 21.76% annualized returns in the last 5 years and the absolute return has been nearly 163% (as on 21/9/2017). The fund has Rs 2,955 Crores of assets under management (AUM). Anup Upadhyay is managing the fund since Feb 2017. The expense ratio of the scheme is 2.06%.

The chart below shows the trailing annualized returns of SBI Magnum Multicap Fund Regular Plan Growth versus the diversified equity funds category over the last 1, 3, 5 and 10 year periods.


Mutual Funds - The trailing annualized returns of SBI Magnum Multicap Fund Regular Plan Growth versus the diversified equity funds category over the last 1, 3, 5 and 10 year periods

Source: Advisorkhoj Research


The fund has significantly out-performed versus the equity diversified fund category in the last 1, 3 and 5 years. We have mentioned a number of times in our blogs that, investors should always keep minimum 5 years investment horizon in mind while investing in equity mutual funds.

Being a diversified equity mutual fund, SBI Magnum Multicap Fund has several advantages like; it is ideal for retail investors and also that investing in diversified equity funds is a safer option

The chart below shows the annual returns of SBI Magnum Multicap Fund versus the diversified equity funds category over the last 5 years.


Mutual Funds - The annual returns of SBI Magnum Multicap Fund versus the diversified equity funds category over the last 5 years

Source: Advisorkhoj Research


This chart shows the annual performance consistency of SBI Magnum Multicap Fund (Regular plan-growth option) versus the diversified equity funds category in different market conditions. As we can see, in the last 5 years, in all the years the fund out-performed the diversified equity fund category returns.

Rolling Returns of fund versus Benchmark

The chart below shows the 3 year rolling returns of SBI Magnum Multicap Fund versus BSE-200 benchmark over the last 5 years. We have chosen a 3 year rolling returns period because investors should always have a long investment horizon for equity funds.


Mutual Funds - The 3 year rolling returns of SBI Magnum Multicap Fund versus BSE-200 benchmark over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator Fund versus benchmark


From the above chart you can observe that, SBI Magnum Multicap Fund (Regular Plan Growth) was able to beat its benchmark consistently in the last 5 years. As you can notice the gap between the 3 year rolling returns of the scheme and the benchmark index is fairly stable and wide. This shows performance consistency due to disciplined and prudent fund management.

Rolling Returns of fund versus category

Let us now discuss the 3 year rolling returns of SBI Magnum Multicap Fund, versus the category average rolling returns.


Mutual Funds - The 3 year rolling returns of SBI Magnum Multicap Fund were consistently superior to the category average rolling returns in the last 5 years period

Source: Advisorkhoj Rolling Returns Calculator – Fund versus Category


The above chart shows that the 3 year rolling returns of SBI Magnum Multicap Fund were consistently superior to the category average rolling returns in the last 5 years period. The maximum 3 year rolling return of the fund in the last 5 years was 32.27%, while the minimum 3 year rolling return of the fund in the last 5 years was 16.51%. The average 3 year rolling return of SBI Magnum Multicap Fund in the last 5 years was 23.18%, while the median 3 year rolling return in the last 5 years was 22.93%. Again, the above is a proof of prudent fund management.

Portfolio Construction

SBI Magnum Multicap Fund has a large cap bias. In the current market context sectors focused on domestic consumption and infrastructure are likely to deliver superior earnings growth in the next few years. Accordingly, sectors like banking & financial, FMCG, energy & power, automobiles and metals etc. has high allocations in this scheme.

From a stock perspective, HDFC Bank, ITC, HCL Tech, Kotak Mahindra Bank, Indusind Bank, ICICI Bank and IOC are some of the top stocks in the scheme portfolio. In terms of company concentration, the portfolio is well diversified with the top 9 stocks comprising approx 33% of the total portfolio value.


Mutual Funds - Sector Composition and Top 9 Holdings of SBI Magnum Multicap Fund

Source: Advisorkhoj Research


Lump sum Returns

The chart below shows the growth of Rs 1 lakh investment in SBI Magnum Multicap Fund (Regular Plan-Growth Option) in the last 5 years. You can see that, a 1 lakh investment in the scheme would have grown to around Rs 2.66 lakhs in 5 years. The fund gave around 21.6% annualized returns over the period of 5 years (based on NAV of 21/09/2017).


Mutual Funds - The growth of Rs 1 lakh investment in SBI Magnum Multicap Fund (Regular Plan-Growth Option) in the last 5 years

Source: Advisorkhoj Research


The chart below shows the growth of Rs 5,000 monthly SIP in SBI Magnum Multicap Fund (Regular Plan-Growth Option) in the last 10 years.


Mutual Funds - Growth of Rs 5,000 monthly SIP in SBI Magnum Multicap Fund (Regular Plan-Growth Option) in the last 10 years

Source: Advisorkhoj Research


As you can see that, current value of the SIP is more than Rs 14 lakhs, while the cumulative investment was only Rs 6 lakhs. The fund gave XIRR 16.51% return. If you compare the fund SIP return with that of SIP return of Benchmark S&P BSE 500 and CNX NIFTY, you can see that the fund has beaten these two benchmarks with huge margin.

SWP returns of SBI Magnum Multicap Fund

Had you invested Rs 10 Lakhs in SBI Magnum Multicap Fund (Regular Plan-Growth Option) 5 years back to get a regular monthly income through SWP (Systematic Withdrawal Plan), assuming withdrawal of Rs 7,000 per month, the current fund value would have been a little over Rs 20 Lakhs. This is over and above the amount of Rs 427,000 which you would have withdrawn through 61 monthly SWP instalments of Rs 7,000.

The fund gave 22.18% return over the 5 years of SWP period. Please check the detailed SWP cash flow of SBI Magnum Multicap Fund (Regular Plan-Growth Option)

Read more about how SWPs can be smart option to get regular income from your investment

Conclusion

In a few days, SBI Magnum Multicap Fund will complete 12 years of its existence. The performance of the fund over the last 5 years has been quite strong. Investors can invest in this fund both in lump sum and through SIP, but they should always have a long term investment horizon, minimum 5 years, to get the best results. Investors should consult with their financial advisors, if SBI Magnum Multicap Fund is suitable for their investment needs. To know more about SBI Magnum Multicap Fund, you can check here

Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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Pradip Chakrabarty

Pradip is a first generation entrepreneur who has built a very successful business for distribution of financial products over last 19 yrs. He is also the Founder and CEO of www.advisorkhoj.com. Pradip is well respected in the Financial Services industry and brings deep domain knowledge and leadership skills and is considered as one of the top Investment Advisors in India. He can be contacted at pradip@advisorkhoj.com

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