Swings on trends

Fund Analysis - Magnum Global

With sporadic bursts of performance, it's hard to know what to do with this fund.

From a fairly dismal track record, it was the best performer in 2004 and the second best in 2005. Last year too it had a great run.

From a large-cap bias, it aggressively turned to investing invest in mid- and small-cap stocks in 2004. The move paid rich dividends which was visible in the performance. During the three-year period from 2004 to 2006, the fund generated better returns as compared to its category in every quarter.

The fund's strength has been its ability to pick trends, invest aggressively and ride through the momentum to make huge gains. So while other fund managers balked at dabbling in real estate plays during their high rise in 2006, this one caught on to Ansal Properties and Infrastructure aggressively. And it was handsomely rewarded for its courage. Some of its other profitable picks include Dishman Pharmaceuticals, Sintex Industries, India Cements, Infotech Enterprises and Jai Prakash Associates. 

This year, it is struggling to live up to its performance standards. Its five-year annualised returns of 64.45 per cent rank it way ahead of the average of 49.94 per cent. But its year-to-date, one-month, three-month and one-year returns are below the category average (as on October 22).

Its earlier focus of 30-35 stocks well spread across all holdings has given way to 70, none of which account for more than 5 per cent. This could be the fall-out of its large asset base which has crossed Rs 1,700 crore. 

With the recent increased diversification, low concentration levels and huge asset base, this mid-cap fund is in uncharted territory.

Though we still think it's a keeper, potential investors may want to wait for signs of improvement.

Alpha Beta R-Squared 20.91 0.81 0.53