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SBI Magnum MidCap Fund: Among the top Mid Cap Picks
Mon, Apr 04, 2016
Source : Khyati Shah, Citrus Interactive

SBI Magnum MidCap Fund is an open-end mid-cap oriented equity diversified fund. The objective of the fund is to provide investors with 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 Midcap companies. Midcap companies are those companies whose market capitalization at the time of investment is lower than the last stock in the S&P CNX Nifty Index less 20% (upper range) and above Rs. 200 crores. The fund was launched in March 2005 and is benchmarked against the S&P BSE Mid-Cap Index. The fund has an AUM of Rs. 1,404 crores as on February 29, 2016 which has gone up by Rs. 505 crores as compared to last year February 29, 2015 (Rs. 899 crores).

Performance

SBI Magnum MidCap Fund has an excellent performance track record of consistently outperforming its benchmark index and the equity diversified category average across all time frames as seen in the table given below. It has been in the top quartile of its peer-set across all time frames as shown from the table given below. Since inception is has outperformed its benchmark by 5.04%.

Scheme Name

6 Months

1 Year

2 Years

5 Years

Since Inception

SBI Magnum MidCap Fund

-1.59

1.28

28.88

21.53

17.3

S&P BSE Mid-Cap Index

-1.67

0.25

22.41

9.08

12.26

Category Average

-3.63

-5.85

18.76

11.92

NA

Rank

32/159

10/156

20/147

4/135

NA

Figures are in % as on March 31, 2016; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

When we look at the calendar year returns it’s quite clear that this fund has beaten its benchmark in all the last five calendar years. It is interesting that this fund has given positive returns in 4 out of the last 5 years even though the bench mark gave a negative return in 2 out of these 5 years. It has beaten its category average in the last four calendar years but it has underperformed in the year 2011. The fund has been in the top quartile of its peer-set in four of the last five years (excluding the year 2011). 

Scheme Name

2011

2012

2013

2014

2015

SBI Magnum MidCap Fund

-25.79

47.98

13.57

71.94

14.92

S&P BSE Mid-Cap Index

-34.19

38.52

-5.73

54.69

7.43

Category Average

-23.96

34

5.39

53.82

3.63

Rank

89/136

11/140

5/144

29/147

8/156

All figures in %

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken lower risk compared to the category median.

 

Standard Deviation

Beta

SBI Magnum MidCap Fund

0.92

0.66

Category Median

0.99

0.89

Risk-adjusted Returns: In terms Treynor and Sharpe ratio (measured over last three years), the fund has provided higher risk-adjusted returns than the category median.

 

Treynor

Sharpe

SBI Magnum MidCap Fund

0.15

0.11

Category Median

0.05

0.05

 

Portfolio Characteristics

Sector Concentration:  The fund’s concentration in the top 3, 5 and 10 sectors is significantly lower than the category median highlighting lesser risk of the fund.

 

Top 3

Top 5

Top 10

SBI Magnum MidCap Fund

29.82

42.62

68.43

Category Median

36.76

50.37

71

Company Concentration: The concentration of funds in top 3, 5 and 10 companies in its portfolio is also significantly lower than the category median highlighting lesser risk of the fund.

 

Top 3

Top 5

Top 10

SBI Magnum MidCap Fund

16.59

25.05

39.53

Category Median

19.94

29.17

46.19

Comparatively lower sector & company Concentration signifies the low risk profile of the fund.

Number of equity holdings: The fund currently holds 55 stocks in its portfolio (February 29, 2016), which is higher than the median stock count for the diversified-equity category, which currently stands at 46. Thus, based on equity count the fund runs a diversified portfolio compared to its peer set. Over the past five years the fund has always had a diversified portfolio with the number of equity holdings over this period averaging 42.

Cash allocation: Its cash allocation at the end of February 2016 was 7.06 per cent. The average cash allocation for last five years is 4.98 per cent. Its maximum allocation to cash over last two years was 11.80 per cent in May 2014 and lowest was -0.19 per cent in December 2014. In 2015 it had an average cash allocation of 6.74 per cent. Thus on the whole the fund maintains higher percentage of allocation to cash.

Portfolio Characteristics: The top 5 sectors in the portfolio had an allocation of 42.62% which is lower than the category average of 48.99%. The top 5 sector include Pharmaceuticals & Drugs, Finance – NBFC, Pesticides & Agrochemicals, Bearings and and Hospital & Healthcare Services.

The fund’s exposure to cyclical stocks currently is 55.96% followed by Defensives with 18.41% and Services with 18.56%. The Top five holdings are Cholamandalam Investment & Finance Company Ltd., The Ramco Cements Ltd., Strides Shasun Ltd., Dr. Lal Pathlabs Ltd. and PI Industries Ltd.

In the last six months the fund has bought stocks of Dr. Lal Pathlabs Ltd., Indraprastha Gas Ltd., Narayana Hrudayalaya Ltd., VIP Industries Ltd. and Bayer CropScience Ltd.

Whereas stocks of HDFC Bank Ltd., DCB Bank Ltd., Alembic Pharmaceuticals Ltd., Yes Bank Ltd., TV18 Broadcast Ltd., Procter & Gamble Hygiene & Health Care Ltd., Jagran Prakashan Ltd. and Shoppers Stop Ltd. have been dropped from the portfolio.

 

Process

The fund manager follows a bottom up strategy and focuses on generating absolute returns with a three years perspective. The objective of the fund is to provide investors with 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 Midcap companies.

A minimum of 65% will be invested in Equities and equity related instruments of Midcap companies. A maximum of 35% can be invested in Equities and equity related instruments of smallcap companies. A maximum of 20% can be invested in Equities and equity related instruments of largecap companies. The fund may invest maximum of 10% in Foreign Securities/ADRs/GDRs and a maximum of 30% in Debt and Money Market instruments. The Portfolio Turnover is defined as the lower of the value of purchases or sales as a percentage of the average corpus of the Scheme during a specified period of time. It will be the endeavour of the fund manager to keep portfolio turnover rates as low as possible.

The fund’s expense ratio is 1.95% which is much lower than the category average of 2.32%. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment in the fund is Rs 5,000.

 

Fund Managers

Sohini Andani has been managing SBI Bluechip Fund since September 2010. She has qualifications of B.Com and CA. Ms. Sohini has more than 18 Years of experince in Financial Services. She has been working with SBI funds Management Pvt. Ltd as Head of Research for 2 years. Prior to joining SBI Funds Management Pvt. Ltd. Ms. Sohini was with ING Investment Management Pvt. Ltd., where she worked as Senior Analyst and was responsible for contributing to Fund Managers and the CIO on their equity investments. Before that she worked with many organizations viz: ASK Raymond James & Associates Pvt. Ltd., LKP Shares & Securities Ltd., Advani Share Brokers Pvt. Ltd. CRISIL, K R Choksey Shares & Securities Pvt. Ltd. handling primarily equity research responsibilities.

Presently she is also fund manager of SBI Magnum MidCap Fund, SBI Blue Chip Fund and SBI Banking and Financial Services Fund.

 

View

SBI Magnum MidCap Fund is one of the best performing funds in its category. It has shown remarkable consistency in figuring as a top quartile fund in most time periods. A strong fund management team, well diversified portfolio, low expense ratio and low turnover in the portfolio positions it favourably as a choice for the midcap allocation in your portfolio.

 
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