Mutual Fund - Magnum Equity Fund : Analysis

Magnum Equity Fund: Energy retains charge

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Magnum Equity is a fund that invests mainly in large-cap (Rs 10,000 crore) stocks. The investment in mid and small-cap stocks is at insignificant levels. The stocks in the portfolio indicate that the fund invests in highly liquid stocks. The fund has bettered the returns of its benchmark, BSE 100, over three- and five-year periods but under-performed it during the last one year.

During the period September 2007 to February 2008, the fund's corpus grew 19.5 per cent to Rs 377 crore, while the NAV per unit has grown 13.9 per cent to Rs 36.9.

An analysis of the fund during this period indicates that the portfolio is minimally churned in terms of stocks.

Sector Moves: Energy (19.8 per cent), the top sector held, has seen exposures increased over two-fold over the September-February period. Substantial hike in exposures is also seen in the Industrial manufacturing and construction sectors. Financial services exposures have been mildly reduced. The metals sector has seen increased exposure. All of these sectors had a good year and also had to face maximum heat during broader market correction in the last couple of months. In a contrarian move, the Pharma sector exposure has been hiked. However, Infotech and automobiles, the other sectors out of favour over the last year, have seen exposures pared. Media and consumer goods sectors have also seen exposures trimmed and so has cement.

Stock Moves: The fund holds 25 stocks in its portfolio, making it compact. Just four stocks found their way into the portfolio during the last six months — Suzlon Energy, Tata Chemicals, Unitech and Mundra Port. These stocks gained between 11 and 49 per cent during this period.

Only eight stocks were exited during these six months. Dish TV and Ambuja Cements stocks that lost over 9 and 27 per cent, respectively, have been shown the door. Interestingly, HUL, ITC, and Siemens, stocks that gained between 9 and 27 per cent, have also been exited. Hindustan Zinc and Bajaj Holdings have also been sold completely.

Jindal Steel and Power, Reliance Industries, BHEL, L&T, Jaiprakash Associates are among the common stocks held during the last six months.

Unusually, Kotak Mahindra Bank figures among the top three stock holdings of the fund. Bharti Airtel, Sun Pharma, Tata Motors and Pantaloon Retail are among some of the prominent common stocks held during this period.