Welcome to PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed SBI Magnum Midcap Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

SBI Magnum Midcap Fund is one of the popular schemes in the Mid Cap Mutual Fund category that has made a significant recovery over the last couple of years after experiencing an extended bout of performance pressure. It now fares reasonably on risk-reward parameters compared to its peers and the benchmark index.

What is the growth of Rs 10,000 invested in SBI Magnum Midcap Fund five years ago?

Past performance is not an indicator of future returns
Data as of January 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

Launched in March 2005, SBI Magnum Midcap Fund aims to invest in a well-diversified basket of stocks of mid-cap companies. With a track record of nearly 19 years, SBI Magnum Midcap Fund has generated returns at a CAGR of about 17% since its inception. However, the journey of the fund has not been smooth. Since its inception, the fund has been through many ups and downs, right from being a top category performer to a category laggard. Notably, the fund showcased robust performance between CY 2011 and 2016, which helped it find a place among the category toppers.

However, SBI Magnum Midcap Fund witnessed a prolonged dull phase between 2016 and 2019 wherein it trailed the benchmark and many of its peers by a noticeable margin. Nonetheless, the fund managed to limit the downside during the 2020 market crash to stand strong among its peers. Moreover, it also stood among the above average-performers in the category during the ensuing bull phase, thereby witnessing a complete turnaround.

This highlights SBI Magnum Midcap Fund’s ability to reward investors reasonably well over longer time frames. The fund’s corpus has nearly doubled in the last one year to Rs 15,458 crore (as of December 2023), making it the sixth largest scheme in the Mid Cap Fund category.

In the last 5 years, SBI Magnum Midcap Fund has grown at a CAGR of 24%, compared to a growth of 25% in its benchmark Nifty Midcap 150 – TRI. An investment of Rs 10,000 in the fund five years back would now be worth Rs 29,382, while a simultaneous investment in its benchmark would now be valued at Rs 30,573.

How has SBI Magnum Midcap Fund performed on a rolling return basis?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Quant Mid Cap Fund	4,222	23.04	23.54	39.27	23.83	20.35	17.61	0.45
Motilal Oswal Midcap Fund	7,411	26.72	26.20	36.26	20.22	17.26	16.69	0.48
PGIM India Midcap Opp Fund	10,043	11.71	13.24	34.14	21.98	19.06	15.58	0.35
SBI Magnum Midcap Fund	15,458	20.63	17.91	34.14	18.75	15.74	14.89	0.40
HDFC Mid-Cap Opportunities Fund	56,033	29.91	21.30	33.40	17.89	17.81	15.09	0.46
Nippon India Growth Fund	23,495	25.43	18.91	32.66	19.45	18.46	15.93	0.43
Edelweiss Mid Cap Fund	4,624	21.53	16.40	32.30	18.79	18.63	16.07	0.40
Mahindra Manulife Mid Cap Fund	1,903	24.85	17.36	31.30	19.08	—	16.79	0.42
Kotak Emerging Equity Fund	38,520	19.78	16.13	31.29	19.06	18.54	14.19	0.40
ICICI Pru Midcap Fund	5,115	16.51	13.04	29.00	14.87	15.64	15.84	0.36
Nifty Midcap 150 – TRI		24.03	16.75	31.95	17.30	17.93	16.81	0.39

The securities quoted are for illustration only and are not recommendatory.
Returns are on a rolling basis and in %. Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as of January 30, 2024
(Source: ACE MF, data collated by PersonalFN)
Please note, this table only represents the best-performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

SBI Magnum Midcap Fund was once a top-performing midcap fund that went through a bad phase and recorded a prolonged underperformance from CY 2016 to CY 2019. However, it showed a significant recovery in performance between 2020 and 2022.

The fund currently stands among the above-average performers in the category over medium-term time frames. In the last 3-year period, SBI Magnum Midcap Fund has outperformed the benchmark Nifty Midcap 150 – TRI by a margin of around 1-2 percentage points and also outpaced many of its peers. Even over the longer 5-year period, the fund has outpaced the benchmark and the category average by a decent margin. Although the fund has significantly trailed the benchmark and several of its peers in the last one year, it holds the potential to bounce back with strong gains.

The volatility registered by the fund is nearly in line with the category average, though lower than the benchmark. SBI Magnum Midcap Fund has rewarded investors with noteworthy risk-adjusted returns. The fund’s Sharpe ratio (0.40) is currently nearly in line with the category average and slightly ahead of the benchmark.

[Read: Rally in Mid Cap and Small Cap Funds: Should You Buy More or Sell Now?]

What is the investment strategy of SBI Magnum Midcap Fund?

SBI Magnum Midcap Fund is a mid-cap fund that is mandated to invest at least 65% of its assets in equity and equity-related instruments of mid-sized companies. SEBI defines mid-cap stocks as companies ranking 101st to 250th in terms of full market capitalisation. The fund also has significant exposure to stocks in the small-cap segment along with minor allocation in stocks of large-sized companies.

SBI Magnum Midcap Fund follows a blend of growth and value styles of investing. It follows a ‘bottom-up’ approach to stock-picking in order to choose high-growth companies across sectors. The fund aims to focus on fundamentally sound companies that have solid management and sound business models, and those that have the potential to grow and become leaders of tomorrow.

The fund manager aims to create a diversified portfolio and holds each of the stock holdings with high conviction. It usually stays invested in around 60-65 stocks at any point in time and holds them with a long-term view. The fund follows a buy-and-hold approach, and accordingly, it has recorded a low turnover rate of 10-15% in recent months.

What are the top portfolio holdings in SBI Magnum Midcap Fund?

Holding in (%) as of December 31, 2023
(Source: ACE MF, data collated by PersonalFN) 

SBI Magnum Midcap Fund’s portfolio is usually diversified across 60 to 70 stocks spread across sectors. As of December 31, 2023, the fund held 71 stocks in its portfolio, with the top 10 stocks accounting for around 30.3% of its total assets. CRISIL, Sundaram Finance, Schaeffler India, Tube Investments of India, and Torrent Power are the stocks that currently form part of the fund’s top holdings. Thermax, Coromandel International, Sheela Foam, The Indian Hotels Company, and Page Industries are among the other core holdings in the fund’s portfolio having an allocation of around 3-4% in each. Some of these stocks have been part of the fund’s portfolio for over 2 years now.

In the last two years, the fund has benefited the most from its holdings in Tube Investments of India, Cholamandalam Investment & Finance Co., TVS Motor Company, The Indian Hotels Company, Schaeffler India, Thermax, The Phoenix Mills that together contributed over 20% to its absolute gains in the last two years. SBI Magnum Midcap Fund has also gained from its exposure to Gokaldas Exports, Coromandel International, Bharat Forge, ABB India, ZF Commercial Vehicle Control Systems India, Mahindra & Mahindra Financial Services, and The Federal Bank, among many others.

SBI Magnum Midcap Fund’s portfolio is well-diversified across Cyclical, Defensive, and Sensitive sectors. The fund holds higher exposure to stocks in the Engineering and Finance stocks that collectively form around 28.6% of its assets. It also holds substantial exposure to Auto Ancillaries, Textiles, Consumer Durables, Consumption, Construction, and Pharma having allocation in the range of 4-7%. The top 10 sectors currently account for 70.6% of its assets.

Is SBI Magnum Midcap Fund suitable for my investment goals and risk tolerance?

While SBI Magnum Midcap Fund has occasionally registered extended bouts of sub-par growth, it has displayed its ability to recover past losses and find a place among the top performers in the Mid Cap Fund category. The fund has a history of doing well over complete market cycles, which gives confidence about the fund’s ability to reward investors well over longer time frames.

SBI Magnum Midcap Fund maintains a well-diversified portfolio of around 60-70 stocks spread across sectors. The fund manager, Ms Sohini Andani, has been managing the scheme for over 13 years now. She avoids taking aggressive bets on any particular stock or sector and exposing investors to unnecessary concentration risk. Moreover, she focuses on picking fundamentally sound stocks and holds them with a long-term view, which can prove to be rewarding for the investors in the scheme.

SBI Magnum Midcap Fund is suitable for aggressive investors looking to benefit from the market leaders of tomorrow with an investment horizon of at least 5 to 7 years.

Watch this video to find out the list of the best Mid Cap Funds for 2024:

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

This article first appeared on PersonalFN here