Is SBI Magnum Global Fund Still Struggling to Adapt Thematic Mandate?

Read the article to know why SBI Magnum Global Fund has been unable to impress the investors after the change in the investment mandate in May 2018.

The 25-year-old scheme of SBI Mutual Fund has been facing constant challenges to live up to the expectation and reputation it has created over the years. The fund previously followed the mid-cap mandate but due May 2018, it became a thematic fund. SBI Magnum Global Fund currently is an MNC thematic fund that invests in the stocks of the companies which have their business in more than one nation. It has a lineage of producing significant returns to the investors and has been trusted by a large number of investors but the current conditions under new mandate are unsatisfactory. Read to know what are the expectations and reasons for the underperformance.

Why is it Unable to Perform?

The erstwhile mid-cap scheme was a consistent performer for a long time but after the re-classification, the new fund manager Mr Anup Upadhyay invests in stocks of the multinational corporation. After the change, the market conditions have been unfavourable for the scheme as MNCs have failed to impress the investors. The mid and small-cap indices have recorded negative returns by a notable margin which also played a major role in downgrading the ratings ofSBI Magnum Global Fund. The fund has more than 55% of the corpus allocated in the stocks of mid and small-cap companies which have their business in multiple countries. Due to higher allocation in mid and small-cap stocks, the fund has been unable to deliver expected gains.

The slump in the MNC themed funds has occurred due to various national and international economic imbalances. Due to continuous trade issues between the US and China, consumption slowdown, slowing GDP in India and many other reasons have resisted the MNCs to flourish in the last 1 year. However, the returns of the scheme in the category have been highest but are still negative.

Is it the Right Time to Invest?

The mid and small-cap industries are expected to make a recovery in the near future but we donโ€™t know when will it take place. The expectations are positive for the upcoming year as anticipated by the experts but the investors should be prepared to face volatile trends. SBI Magnum Global Fund has an aggressive portfolio and the investments must be done for the long term. Advantages of dips can be taken but investors should avoid timing the market as the performance of the scheme depends on multiple reasons and the future is unpredictable. The fund has been unable to perform well under new mandate but has the ability to deliver the highest returns in the favourable market conditions due to the involvement of aggressive stocks.

Who Should Invest?

SBI Magnum Global Fund comes from a prominent fund house and is managed by professional fund managers. As the stocks are of multinational companies, the performance also gets the influence of international market although the market conditions of India are majorly responsible for the performance. The fund is ideal for experienced investors who can track the market and take high risk in mutual fund investments. The risk is slightly higher than peers due to higher involvement of small and mid-cap stocks and hence the investment must be done for the long term. New investors and conservative investors can skip this scheme. The assistance of financial experts must be taken before investment.

As the fund is constantly suffering from under-performance after the change in the mandate, nothing can be guaranteed in the future. However, due to the higher proportion of small and mid-cap stocks, better gains can be expected when the market conditions favour emerging businesses. The 25-year-old scheme might be struggling to adapt to the new mandate but the market conditions have played a key role in resisting the growth of SBI Magnum Global Fund.