Midcap Fund: Sbi Magnum A Smart Investment Choice?

SBI Magnum Midcap Fund is a mutual fund that predominantly invests in a well-diversified basket of equity stocks of mid-cap companies. The scheme aims to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme. The fund has a Value Research rating of 4 and is considered to have a very high risk. The minimum SIP investment amount is ₹500, while the minimum lumpsum amount is ₹5,000. The fund has delivered a 5-year annualized return of 29.53% as of 24 October 2024.

The SBI Magnum Mid Cap Fund's performance and returns

The SBI Magnum Mid Cap Fund has a stated objective of providing investors with opportunities for long-term growth in capital, along with the liquidity of an open-ended scheme. This is achieved by investing predominantly in a well-diversified basket of equity stocks from mid-cap companies.

The fund has delivered a 5-year annualised return of 29.53% as of 24 October 2024. It has also generated returns higher than the benchmark NIFTY Midcap 150 Total Return Index over the last 3 years. The fund's 1-year annualised returns are lower than the category average by 10.94%.

The expense ratio of the fund is 1.65% or 1.67% (as of 30 July 2024), which is lower than the category average of 1.83%. The fund has a minimum SIP investment of ₹500 and a minimum lumpsum investment of ₹5,000.

The NAV of the fund as of 17 August 2024 was ₹235.9899, and the AUM was ₹21,127 Cr as of 31 July 2024. The risk associated with this fund is considered 'Very High'.

The fund's investment objective and strategy

The SBI Magnum Mid Cap Direct Plan Growth fund is a mutual fund scheme that was launched by SBI Mutual Fund on 29 June 1987. The fund aims to provide investors with opportunities for long-term growth in capital, along with the liquidity of an open-ended scheme. This is achieved by investing predominantly in a well-diversified basket of equity stocks from mid-cap companies.

The fund has a minimum SIP investment of ₹500 and a minimum lumpsum investment of ₹5,000. The latest NAV as of 18 October 2024 is ₹271.03, and the fund currently has an Asset Under Management (AUM) of ₹10,37,900 Cr. The expense ratio is 1.67, and the exit load is 1% if redeemed within one year.

The SBI Magnum Midcap Fund is considered a very high-risk investment. It is mandated to invest at least 65% of its assets in mid-cap stocks at all times. The fund has a portfolio that is split between different types of investments, with 94.88% in equity, 4.65% in cash and cash equivalents, and 0.47% in debt as of 31 July 2024.

The fund has delivered strong returns, with 3-year, 5-year, and 10-year annualised returns higher than the category average. It has generated returns higher than the benchmark (NIFTY Midcap 150 Total Return Index) in the last three years.

The fund's risk and volatility

The SBI Magnum Mid Cap Fund is considered a very high-risk investment option. The fund's objective is to provide investors with long-term growth in capital by investing predominantly in a well-diversified basket of equity stocks from Midcap companies.

This fund is best suited for investors with a high-risk appetite and a long-term investment horizon. As per SEBI's Riskometer, the fund has a 'Very High' risk level. This means that compared to funds that invest in larger companies, the SBI Magnum Mid Cap Fund tends to experience more significant ups and downs due to its focus on medium-sized companies.

It is important to note that investors should not invest in this fund, or any other mid-cap fund, if they need to redeem their investment within seven years. The fund's returns over the last five years have been 29.53% annualized, outperforming the category average.

In terms of volatility, the SBI Magnum Mid Cap Fund has an expense ratio of 1.65% to 1.67%, which is slightly lower than the category average of 1.83%. The fund also has an exit load of 1% if redeemed within one year, and there are no other charges.

When considering an investment in the SBI Magnum Mid Cap Fund, it is essential to carefully evaluate the associated risks and volatility. While the fund has the potential for higher returns in the long term, it is important to be prepared for more severe fluctuations along the way.

How to invest in the SBI Magnum Midcap Fund

To invest in the SBI Magnum Midcap Fund, you can follow these steps:

• Understand the Fund: Before investing, it is essential to understand the nature and objectives of the fund. The SBI Magnum Midcap Fund is a mutual fund scheme that aims to provide investors with long-term capital growth by investing in a diversified portfolio of equity stocks of midcap companies.
• Evaluate Risk and Returns: The SBI Magnum Midcap Fund is considered a Very High-risk investment. While it has the potential for higher returns, it also carries a higher risk compared to other investments. Evaluate your risk tolerance and financial goals before investing.
• Determine Investment Amount: Decide on the amount you want to invest. The SBI Magnum Midcap Fund has a minimum SIP (Systematic Investment Plan) investment of ₹500, and the minimum lump sum investment is ₹5,000.
• Contact SBI Mutual Fund: You can contact the SBI Mutual Fund office at 9th Floor-Crescenzo, C-38 & 39-G Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051, or call them at 022-61793000 or 1800-425-5425. Their website is www.sbimf.com.
• Complete the Necessary Paperwork: To invest in the SBI Magnum Midcap Fund, you will need to fill out the required application forms and provide necessary documentation, such as proof of identity and address.
• Make the Investment: Once you have completed the necessary paperwork and met the minimum investment requirements, you can proceed to make your investment. You can invest in the SBI Magnum Midcap Fund through various methods, such as online banking, demand drafts, or cheques.
• Monitor Your Investment: After investing, it is important to regularly monitor the performance of the fund and review your investment portfolio. Remember that mutual fund investments are subject to market risks, and past performance does not guarantee future results.

Remember to carefully read all scheme-related documents and seek advice from financial advisors before making any investment decisions.

The fund's expense ratio and exit load charges

The expense ratio of the SBI Magnum Midcap Fund is given as 1.67 in one source, 1.65% in another, and 0.77% in another. The expense ratio refers to how much of a fund's assets are used towards administrative and other operating expenses. The average expense ratio for this category of fund is 1.83%. The fund has an exit load of 1% if redeemed within 1 year.

Exit load is a charge applied to mutual fund redemptions before the designated investment period. If the mutual fund units are sold within 1 year from the date of investment, the entire amount of gain is taxed at the rate of 20%. If the units are sold after 1 year from the date of investment, gains up to Rs 1.25 lakh in a financial year are exempt from tax. Gains over Rs 1.25 lakh are taxed at the rate of 12.5%.

Frequently asked questions