| Type |
Open ended
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Nature |
Diversified (Equity)
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| Min. Investment |
Rs 5,000 |
Face value |
Rs 10 |
| Entry Load |
2.25% (waived off during IPO) |
Exit Load |
1.50% (on exit within 6 months from IPO) |
| Issue Opens |
Feb 21, 2005 |
Issue Closes |
Mar 17, 2005 |
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To provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well diversified basket of equity stocks of companies whose market capitalisation is between Rs 200 crores (Rs 2 bn) to Rs 2,000 crores (Rs 20 bn) and in debt and money market instruments.
| Instruments |
Normal Allocation |
| Equity |
upto 100% |
| Debt/Mone Market |
upto 30% |
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Magnum Midcap Fund (MMF) is a high risk - high return fund that seeks to invest in mid cap stocks and benefit from the long-term growth potential of investing in the same. Mid cap stocks have been a rage over the last 12-18 months, but we believe most investors often fail to appreciate the above-average risks associated with them.
There can be little debate on the potential mid cap stocks bring to the table. As has become a common marketing line for mid cap funds - today's mid caps are tomorrow's large caps. However, not all mid caps graduate into large caps and that is where the risk lies.
Mid caps could be on a stick wicket where audit, compliance and risk control measures are concerned. As information on these companies is not widely and readily available, most investors do not have a clear view on how mid cap companies fare on these parameters. Also mid cap stocks are generally illiquid so exiting from the stock may not be very easy; the fund manager may witness considerable erosion in his investments before he finally exits the stock.
Investors who appreciate the higher risk levels associated with mid cap stocks/mutual funds, can consider investing in MMF. SBI Mutual Fund over the last 12-18 months has been in the forefront in riding the mid cap rally. In the process the fund has 'discovered' a bevy of mid/small cap stocks, in some cases earlier than its peers and the exceptional performances of Magnum Global, Magnum Contra and Magnum Taxgain lend credence to this fact.
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The fund has indicated that it will invest at least 65% of its net assets in companies with a market capitalisation ranging between Rs 2 bn - Rs 20 bn. These companies will form the core of MMF's mid cap investment universe. The fund can also invest upto 10% of assets in companies that have a market cap outside of this range (i.e. either higher than Rs 20 bn or lower than Rs 2 bn). It can invest upto 30% in money market instruments.
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Mr. Sandip Sabharwal is an Assistant Vice President & Fund Manager. He is a Chemical Engineer from IIT-Delhi and holds a Post Graduate Diploma in Management from IIM-Bangalore. Mr. Sabharwal has been associated with SBI Mutual Fund since 1995; he worked as a research analyst for the first three years where he covered a number of sectors and then moved to fund management. Mr. Sabharwal manages Magnum Tax Gain, Magnum Global and Magnum Multiplier Plus 1993 among others.
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With at least 65% of MMF's assets exposed to small and medium-sized companies, the fund will be exposed to above-average risks associated with such stocks. The fact that it can invest some portion (10%) outside the mid cap universe, as also 30% in money market instruments, should help it blunt volatility in mid cap stocks during a turbulent market phase. While the fund has the potential to deliver above-average growth over the 3-5 year horizon, investors must factor in the higher risk levels.
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