SBI Magnum Balanced Fund: Time for diversification

ET INTELLIGENCE GROUP: Post the March monetary policy review, interest rate cycle has reversed and the directional risk in interest rates is behind us. Bonds are expected to provide some stability to portfolio. And even though equities are expected to be volatile in the near term, in the next three years, equities may provide reasonably good returns.

At such a point, balanced funds are a good investment option. Among balanced funds, investors may consider investing in SBI Magnum Balanced Fund, which has 75:25 equity-debt ratio.

On the equity side, the scheme invests close to 50% in large-sized companies, while the remaining in the mid-and-small size companies.This multi-cap exposure helps the scheme deliver superior returns as it captures growth stories across various sizes of companies. On the debt side, the scheme invests largely in government securities. This has helped the scheme beat its benchmark Crisil Balanced Fund Aggressive.In the past three and five year periods, the scheme has given 20% and 18% returns, respectively, while its benchmark index has given 12% and 10%, respectively, in the same period.


In the past six months, the scheme's fund managers R Srinivasan and Dinesh Ahuja have invested in diversified themes where a key binding factor is value investment. These companies are Aurobindo Pharma, Bharti Airtel, Gruh Finance, Reliance Industries and United Spirits. This gives a proper diversification in terms of themes and market capitalisation.