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S. Vaidya Nathan

INVESTORS in SBI Magnum Balanced Fund may retain their holdings, as there has been a substantial improvement in the fund's performance over the past three years. The equity portfolio has a neat mix of mid-cap stocks and large-cap stocks.

Despite a sizeable allocation to large-cap stocks, the fund has performed impressively. The mid-cap stocks in the portfolio have delivered attractive returns as they have enjoyed several bouts of re-rating over the past couple of years. It has outperformed the CRISIL Balanced Fund Index and the BSE-100 by a comfortable margin.

Over a five-year period, the NAV has, however, remained largely flat.

In the 10 years since launch, the fund has turned in annual returns of 16 per cent; a large part of this owing to the sharp improvement in fund performance since early 2003.

The recovery of SBI Magnum Balanced and the move to the top of the ranks along with HDFC Prudence in the balanced funds category is in line with the trend evident in all the SBI-managed funds.

The fund has consistently maintained 60-65 per cent of assets in equities. This has helped perk up returns, aided in no small measure by the largely bullish equity market of the past two years.

The fund has been aggressively managed and appears to have picked the right themes and stocks to ride the momentum in the market.

Even in the large-cap space, the fund has shuffled its portfolio over the past few months.

Reliance, SBI and Jet Airways have replaced the likes of ACC, Gujarat Ambuja and NTPC.

Among mid-cap stocks, the fund has replaced Pantaloon Retail and Uttam Galva Steels with IVRCL Infrastructure and Adlabs Films. So far, such changes have yielded attractive returns.

Suitability: The fund is appropriate for investors who seek a mix of equity and debt and prefer to go through the balanced funds route.

This is especially true for investors who do not have the time and inclination to construct a balanced portfolio and ensure that the asset allocation remains in line with their investment objective and risk preferences.

Unlike HDFC Prudence, SBI Magnum Balanced Fund still has a small asset base of a tad less than Rs 100 crore.

This provides for a high degree of flexibility in asset management, coupled with the quality of stock selection, and holds promise of the fund sustaining the momentum in NAV.

Investors may opt for the dividend option as payments are exempt from tax.

Fund facts: The fund was launched in October 1995. The minimum investment is Rs 5,000.

The entry load is 2.25 per cent. There is no exit load. Mr Sachin S. Sawarikar is the manager.

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