Launched in 2005, SBI Magnum Multicap Fund is completing 15 years this September. The Rs 8700-crore fund is one of the biggest multicap mutual fund schemes. In this article, we will attempt to review the fund performance as it nears an important milestone. Read on.

Fund facts

SBI Magnum Multicap has a long track-record of performance. It is currently managed by Anup Upadhyay, who is in charge since Feb 2017. While the fund is technically a multicap fund, it is virtually managed as a large and midcap fund with little exposure to smallcap. Historically, the fund has kept above category average largecap exposure and maintained below category average smallcap exposure. We like multicap funds that keep their smallcap exposure to bare minimum. When most investors choose a multicap fund, they are okay as long as volatility is higher than largecap fund.

The SBI Magnum Multicap Fund maintains a 40-50 stock portfolio, with the top 10 by weight usually having 50% weight. Its current top holdings are HDFC Bank (Financials), TCS (Technology), ICICI Bank (Financials), HCL Technologies (Technology), ITC (FMCG), Bharti Airtel (Media And Communications), Reliance Industries (Energy), Kotak Mahindra Bank (Financials), Axis Bank (Financials) and JK Cement (Construction). As you can see, the fund has larger than category average bias towards financials and technology. It also appears over-weight on energy. However, it is under-weight in the cases of FMCG, Auto and Healthcare.

Performance

Under Anup Upadhyay, SBI Magnum Multicap Fund is having one of its best periods. However, compared to the index, the alpha creation needs improvement. The fund is yet to reach the performance level seen in Richard D’souza times. You can check the fund performance across various managers below.

In terms of point to point performance, short-term data does impact short-term performance. In the 1-year period, the fund’s current performance lags its own benchmark by close to 600 basis points. The lingering effects can be seen in 3-year period as well, with fund under-performing by close to 200 basis points. It is only in the longer-term period like 10 years, that the multicap fund beats its benchmark. Unfortunately, the fund (regular plan) since inception to August 25, 2020 has not beaten S&P BSE 500 Total Return Index, with fund’s 11.1% CAGR short of 11.65% of the benchmark. However, the fund’s direct plan has beaten the benchmark.

In terms of rolling returns, we compared SBI Magnum Multicap with 4 peers with similar asset size viz. UTI Equity, ABSL Equity, Franklin India Equity and Nippon India Multi Cap. Among the 5 funds, SBI Magnum Multicap on three year rolling return has one of the best averages (16.5%). The fund also boasts the 2nd highest maximum return in this period. Next, we come to the return distribution. The fund has the 2nd lowest percentage of times of negative returns, which is a critical hint. Also, the fund has the highest percentage of times of 20-30% rolling returns and the 2nd highest in terms of more than 30% rolling return. You can check the rolling return stats below.

Multicap category

At the moment, in the 1-year point to point return the best funds are Quant Active Fund, Parag Parikh Long Term Equity Fund, PGIM Diversified Equity Fund, UTI Equity Fund and Canara Robeco Equity Diversified Fund. The same names dominate the 3-year period as well.

In the 5-year period, DSP Equity Fund replaces PGIM scheme in the top 5 multicap performers list. In the 10-year period, Invesco India Multicap Fund is the best, followed by UTI Equity Fund, Kotak Standard Multicap Fund, Quant Active Fund and IDFC Multicap Fund.

As you can see, SBI Magnum Multicap does not figure in these point to point time period top performer list in either 1 year, 3 year, 5 year or 10 year. That does mean there is something wrong with the fund. It only goes to show other funds are doing something better. Take a look at the snapshot below.

RupeeIQ take

With its long track-record, it can be said with a certain degree of confidence that the SBI Magnum Multicap Fund has distinguished itself by performing during most market cycles. It is a dependable multicap offering. We also have looked at the risk stats of the fund, and it is clearly one of the superior offerings when you adjust for the risk taken. During long periods of fund existence, there will be periods when a fund may not figure in the best category performer lists. What is important is that the fund does not languish at the bottom, and has a good hit ratio in terms of stock selection over the long-term. There is, of course, room for improvement.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].

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