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June 15, 2000

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Magnum Balanced Fund

Dhirendra Kumar

Magnum Balanced is an aggressive balanced fund from SBI Mutual Fund. The fund has been generous with payouts and gave a 1:10 bonus in November 1997 and a 1:2 bonus along with a 30 per cent dividend in March 2000. The fund levies a 1.5 per cent entry load, while redemption is at NAV.

Magnum Balanced has given an annualised return of 26.66 per cent since launch. Launched in September 1995 when the market was on a downhill, the fund tilted towards debt. As a result the fund was unable to deliver and trailed behind its aggressive peers like Alliance '95. The turnaround for the fund came during the end of 1998 aided by the increased allocation to equity with an aggressive investment strategy. The subsequent buoyancy in the markets lent greater strength to the fund's performance. The realigned portfolio was also a blend of cyclical and growth stocks diversified evenly across sectors.

However, in its bid to perform better, Magnum Balanced went on an overdrive since December 1999 to augment its equity exposure way beyond 70 per cent, while debt allocation was marginalised. The fund also stretched its exposure to the software sector and the addition of the telecom to the portfolio in January 2000 took the ICE component of the fund to 75 per cent. The fund soared way ahead of its peers to rank at the top of its league. The calendar 1999 returns were 192.5 per cent and the next two months brought a further gain of 33 per cent.

During the past three months, the fund has been augmenting its debt allocation and has lost a whopping 54 per cent in the post-budget meltdown in the equity markets. As on May 31, 2000, the fund has about a third of its portfolio in debt with Government of India securities accounting for 15 per cent of the net assets. Of the equity holdings, the ICE component still accounts for 56 per cent. With its current portfolio distribution, the fund still has a high exposure to ICE stocks, which could make it volatile.

Fund Basics          
Objective Size (Rs cr) NAV:13/6 Sell Price Buy Price Total Returns (%)
Balanced 174.00 16.35 16.35 16.35 26.66%
Benchmark Comparisons (%)        9/6/2000
  1M 3M 6M 1Yr 3Yr
Fund 2.49 -41.12 16.15 112.94 38.60
Sensex 3.82 -7.42 1.28 16.63 9.37
Natex 1.07 -15.69 2.33 24.24 13.59
Obj. Avg. 0.69 -18.38 2.72 37.89 23.17
Top Holdings (1/6/2000)         Net assets (%)
Top Equity Holdings          
Aftek Infosys         6.59
Software Solutions Integrated         6.53
Sterlite Industries         5.48
Zee Telefilms         4.61
Himachal Futuristic Communications         4.24
Ramco Systems         3.42
Dr. Reddy's Laboratories         2.94
Vikas WSP         2.39
Gujarat Ambuja         2.24
Sri Adhikari Brothers         3.09
Top Debt Holdings          
GOI Securities         14.98
Associated Cement Company         3.09
ICICI         3.05
IDBI         3.03
Bharat Petroleum Corporation         2.88
Hindustan Petroleum Corporation         2.86

Source: Value Research

Fund File

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