The Hindu Business Line : Magnum Balanced Fund: Invest

Fresh investments can be considered in based on its good long-term track record. Despite a hybrid structure, balanced funds tend to have a higher exposure to equity, with 30-35 per cent of their assets invested in the debt and money markets.

The advantage of investing in balanced funds in comparison to pure equity funds is that the fund has the flexibility to move into debt, during volatile phases in the equity market.

Magnum Balanced Fund has rewarded its investors with a compounded annual return of 38 per cent and 44.5 per cent respectively for periods of three and five years.

The fund has outpaced its benchmark CRISIL Balanced Index by a huge margin over the same time-frame. Its five-year returns compare well with two-thirds of the diversified equity funds in operation.

Suitability: Magnum Balanced Fund has over the past year retained its equity allocations at broadly 65-85 per cent of its assets.

The fund invests one-third of its equity portfolio in mid- and small-cap stocks and the rest in large-cap stocks with a market capitalisation of Rs 5,000 crore and above.

Despite its tendency to invest in large-cap stocks, the fund’s higher exposure to equity pegs up its risk profile.

Performance: The fund has generated a return of 31 per cent over the past year, five percentage points over and above its benchmark. But it trailed its peer HDFC Prudence Fund, by 8 percentage points over this period.

The fund’s returns tend to deviate from the benchmark by a good margin during sharp market moves, both on the upside and downside. On a monthly return basis, in the past 24 months, Magnum Balanced has trailed the benchmark on 10 occasions.

Portfolio Overview: The portfolio is well-spread-out across sectors. IT continued to be the preferred sector, along with energy and industrial manufacturing in recent months. The top 10 stocks account for 32 per cent of the assets. In the latest portfolio, debt and money market instruments cornered 33 per cent. Taking advantage of the higher yields and spreads on corporate debt, the fund has invested close to 12 per cent of its assets in non-convertible debentures, with the rest in shorter-term debt.

Fund facts: Magnum Balanced Fund was launched in December 1995 and the assets under management are Rs 299 crore. The fund manager is Mr Pankaj Gupta. The entry load charged for investments below Rs 5 crore, is 2.25 per cent.

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