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FE Investor Bureau
New Delhi, Oct 27: Restructuring and consolidation of portfolio is beginning to pay dividends for Magnum Multiplier Scheme, 1990. Launched as a closed-end fund on Janaury 1, 1991, the scheme went open-end on December 31, 1997. The scheme continues to outperform its benchmark, the BSE Sensex.
While the Sensex has fallen by 21.02 per cent in nearly 10 months between December 31, 1997 and October 14, 1998, the net asset value of the fund has risen by 3.21 per cent during the same period. The fund has thus outperformed the sensex by 24.23 per cent. During the last one month, the scheme has outperformed its benchmark by 9.56 per cent.
The latest portfolio as on October 23, 1998 reveals that the scheme has the highest exposure to HLL with a weight of 14.16 per cent. The other scrips from the non-consumer durables sector are Dabur and Indian Shaving Products.
The fund has the second largest exposure to Satyam Computers with a weight of 8.15 per cent. The other scrips from the IT sector are BFL Software,Infosys Technologies, DSQ Software, Pentafour Software, Sierra Optima and Digital Equipment. The portfolio has a fair sprinkling of engineering sector scrips including Ingersoll Rand, Cummins, BHEL, ESAB India, Amara Raja Batteries, Revathi CP Equipment, ITW Signode and Shriram Honda Power Equipment. Among consumer durables, scrips include Bata India, Bausch & Lomb and Carrier Aircon.
A massive restructuring of the scheme was done prior to its conversion with a focus on defensive, high growth sectors like information technology, consumer products and pharmaceuticals. The three sectors cuurently account for approximately 65 per cent of the total exposure to equities. According to the managing director of SBI Mutual Fund, Niamatullah, the scheme invests in companies having a sustainable competitive advantage owing to their leadership in either technology, brands, distribution network, etc. ``The fund follows a combination of top-down and bottom-up approach in investing,'' he adds.
The scheme is the secondlargest equity scheme and has a current corpus of Rs 92.37 crore with an investor base of 3 lakh. The current NAV of the scheme is Rs 10.22. The AMC charges an exit load of 2 per cent while the entry load was waived recently. The scheme has so far paid dividend on five occassions including a 15 per cent dividend in fiscal 1996 and 10 per cent in fiscal 1997. Since launch, the scheme has paid an aggregate dividend od 85 per cent.
Currently, the top 40 scrips in the scheme account for 96.87 per cent of the portfolio. The scheme seeks long term capital appreciation through investment in equities. The scheme can hold at least 70 per cent in equities and the balance in debt instruments. The scheme currently holds 90 per cent in equities, 4.66 per cent in debt and 5.34 per cent in money market instruments.
When the scheme went open-end, it was able to retain 70 per cent of the corpus and 75 per cent of its investors. Assuming a NAV of Rs 10 on January 1, 1998, an original investor would have got a return of Rs8.5 or 85 per cent on exit in seven years. This translates into a return of only 12.15 per cent per annum.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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