The Portfolio Accelerator
A true to label mid cap fund, SBI Magnum Midcap rarely exceeds a large cap allocation of 10 per cent
SBI Magnum Midcap Fund
An average performer until 2010, SBI Magnum Midcap has risen steadily up the ranks since 2011. A true to label mid cap fund, SBI Magnum Midcap rarely exceeds a large cap allocation of 10 per cent. As on date, the fund has a mere 7.6 per cent allocation to large caps. Not averse to making out-of-the-box plays, the fund’s bottom up strategy is made evident by the fact that its highest sectoral exposure is to healthcare (close to 19 per cent), at a time that most equity funds are heavily skewed towards financial stocks. SBI Magnum Midcap has witnessed a number of its unconventional plays paying off in the past, including Motherson Sumi Systems, Cholamandalam Finance, Strides Arcolabs and Rambo Cement. As a principle, the fund also tends to steer clear of companies with low promoter holdings.
A firm believer in buying and holding high conviction, potential turnaround stocks for the long term, the fund all but avoids tactical calls; this works in its favour when markets go awry. This philosophy is evidenced by its relatively low portfolio turnover ratio of 28 per cent. The fund has outperformed its benchmark (the Nifty Mid Small Cap 400 index) handsomely over the past five years, beating it by close to 9 per cent per annum.
RISK CONTROL MEASURES
- Sector overweight or underweight positions capped at 10%+\- vis-avis benchmark
- Stock specific deviations are restricted to 7%+\- vis-a-vis benchmark
- Defined asset allocation between large, mid and small caps with maximum 35 per cent limit on small caps
Ideally Suited For…
High-risk investors with a time horizon of 5-7 years who are aiming for above normal growth, and are willing to withstand the potentially high volatility that’s intrinsic to mid and small cap stocks. The fund is also ideally positioned for individuals saving for their retirement through long-term SIP’s.
Why Invest Here in 2017
SBI Magnum Midcap Fund’s bottom-up approach to stock picking, proven track record of cherry picking winners and focus on ‘not losing money for investors’ makes it an ideal pick in the mid cap space in 2017.