Magnum Multicap Fund (MMF) is the latest addition to the ever-burgeoning list of schemes from the SBI Mutual Fund. The scheme falls in the segment of flexicap funds i.e. the ones which invest in stocks across market capitalisations (large, mid and small caps). Theoretically, funds with such a fluid investment style are best equipped to capitalise on opportunities across market segments. A bull run in stocks from the mid cap segment should be credited for the launch of a number of flexi cap funds in the recent past.
Equity-oriented funds from SBI Mutual Fund have emerged as top performers across categories over the last 2 years. However these funds have a history of taking sectoral bets, holding concentrated stock holdings and dabbling in stocks from the mid cap segment.
Another factor to be considered is the strong mid cap flavour in most schemes from the fund house. Given that Magnum's best performing funds are from the mid cap segment, it remains to be seen how a pre-dominantly (atleast 50% of the corpus) large cap fund like MMF will fare in terms of performance.
With a fluid investment style and possibility of substantial (upto 50%) holdings in the mid and small cap segments, MMF is likely to be a high risk - high return investment proposition. Investors keen on investing in the flexicap funds segment can consider adding to their portfolios some of the existing funds with proven track records.
