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Magnum Global: Going places?
November 30, 2004 12:59 IST
The performance of Magnum Global Fund over the past few months has been a revelation. At a time when markets have tested the performance of even established diversified equity funds, MGF (76.56 per cent NAV appreciation over the 1-Yr period) has emerged leader and done so by a comfortable margin. Top performers over 1-Yr| Diversified Equity Funds | NAV (Rs) | 1-Yr | 3-Yr | 5-Yr | SD | SR | | MAGNUM GLOBAL | 13.94 | 76.56% | 46.56% | 10.62% | 7.20% | 0.62% | | HDFC CAP BUILDER (G) | 31.27 | >63.22% | 48.96% | - | 6.88% | 0.63% | | UTI - DYNAMIC EQUITY (G) | 19.07 | 54.60% | - | - | 7.55% | 0.53% | | RELIANCE GROWTH (G) | 99.28 | 54.36% | 70.87% | 28.74% | 7.80% | 0.64% | | FRANKLIN INDIA PRIMA (G) | 71.91 | 54.33% | 45.28% | 19.21% | 7.38% | 0.57% | | ALLIANCE EQUITY (G) | 97.28 | 53.67% | 68.90% | 27.79% | 8.29% | 0.62% | | BIRLA MIDCAP (G) | 28.12 | 49.97% | - | - | 7.12% | 0.55% | | HSBC EQUITY (G) | 32.76 | 47.83% | - | - | 7.43% | 0.65% | | SUNDARAM SEL. MIDCAP (G) | 32.23 | 47.83% | - | - | 8.63% | 0.56% | | CANGLOBAL | 10.63 | 46.47% | 28.58% | 1.06% | 6.81% | 0.49% |
(Source: Credence Analytics. NAV data as on Nov 25, 2004. Growth over 1-Yr is compounded annualised) (The Sharpe Ratio is a measure of the returns offered by the fund vis-à-vis those offered by a risk-free instrument) (Standard deviation highlights the element of risk associated with the fund.)The scale of MGF's performance can be gauged from the table above; its closest peers HDFC Capital Builder (63.22 per cent) and UTI Dynamic Equity (54.60 per cent) lag the leader by significant margins. However over the 3-Yr period, MGF still has some catching up to do vis-à-vis its peers. Another interesting factor is that MGF didn't feature in the monthly fact sheets until April 2004; possibly indicating that MGF took even the fund house (SBI Mutual Fund) by surprise.
Rank top-performing diversified equity funds
A common thread running across most of the top-performing funds is that they invest pre-dominantly in the mid-cap segment and MGF is no different. However this wasn't always the case. In the year 2003, MGF held a portfolio comprising of nearly evenly divided large cap and mid cap stocks. MGF displayed a fluid investment style by switching to a portfolio lop-sided in favour of the mid cap variety. MGF's performance on the volatility control (standard deviation 7.20 per cent) front has been a reasonable one vis-à-vis its peers. This is rather surprising considering the fund's propensity to hold a sectorally concentrated portfolio; as on October 29, 2004 MGF's top 5 sectors accounted for nearly 60% of its total assets. Such high concentration levels can expose the fund to instability going forward. On a positive note, the fund's performance on the risk-adjusted return front (Sharpe ratio 0.62 per cent) has been an impressive one. While MGF's performance over the last 12 months has undeniably been an impressive one, investors must realise that these are still early days for the fund in the top performers' league. Also factors like a fluid investment style and a concentrated portfolio holding must be taken into account before making any investment decision.
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