Fund of Fortnight
Reason for recommendation
SBI Magnum Multi Cap Fund - Direct Plan (Growth)
The latest GDP numbers show how the growth in Indian economy is slowing down. In such times, large cap dedicated funds perform better than others because larger companies tend to handle the economic slowdown in a far better way. Nonetheless, government is taking actions to revive growth in the economy that is likely to make mid and small cap stocks attractive again, especially after their recent fall. Therefore, currently, it makes sense to put your money in funds that invest across market cap. SBI Magnum Multicap fund is one such fund that has the mandate to invest across the market cap. Currently, it is large cap tilted. At the end of July 2019, 62 per cent of total corpus of the fund was invested in large cap stocks, while, mid cap and small cap dedicated stocks contributed 16.53 per cent and 15.79 per cent, respectively. This shows that fund is well placed to ride the wave of opportunity as in case the economy recovers, the broader market performs. The fund has been one of the best performers in its category in last one year. Yes, the fund did underperform in longer period, primarily due to its bad performance in first few years of existence. However, in last seven years ending 2018, the fund has consistently outperformed its category. The portfolio of the fund is not being constructed only by the fund manager but also by a team of in-house analysts who pick the best stocks within each sector under its coverage. The fund selects stocks based on bottom up strategy and not based on macro calls. In terms of sector allocation, the fund is betting big on energy and technology sectors where it has more weight compared to other categories. The fund is well diversified with 57 stocks and is well suited for moderate risk investors.