Magnum MIP-G may not have topped the performance chart, but its decent long-term performance with great stability would please most of the investors. Magnum MIP-G's focus on quality debt and large-cap equity portfolio is largely behind the fund's low volatility, making it a suitable offering for conservative investors.
The fund's quality consciousness can be seen from the fact that in the past three years, Magnum MIP-G has not invested in below AA+ rated bonds. Initially, it was heavily invested in AAA rated bonds (average 75 per cent). Moreover, it had one of the highest average maturity among the peers-nearly three years. But it had no gilt allocation and marginal equity exposure and remained an average performer.
The fund bought gilts for the first time in August 2002 and that too in small dosage. Till February 2003, it had an average 2.5 per cent gilt exposure and the fund's average maturity was on the lower side in the category. Though this worked in the fund's favour in the volatile first quarter of 2003, but was unable to ride the debt market rally in the last quarter of 2002. In the past one-year, however, the fund has increased its gilt exposure in a big way - currently 65 per cent - the highest in the MIP category. Consequently, the fund's average maturity is also on the higher side of the category.
The fund's cautious strategy is also reflected in the fund's equity portfolio, which has largely been dominated by large-caps. Interestingly, Magnum MIP-G did not have equities for most of its tenure. The fund started investing in equities in January 2002 and its investment was confined to a few select stocks, accounting for just 3.75 per cent allocation through 2002. This helped the fund in outperforming the category when equity markets tanked in the second and third quarter of 2002.
Post May 2003, when equities rallied, Magnum MIP-G quickly raised its exposure to nearly 12 per cent in June 2003 from 5.7 per cent in May. And since then, its equity exposure has been in a high band of 10-13 per cent. Gains in its large-cap picks like SBI, BHEL and Maruti Udyog have helped the fund outperform the category in the last two quarters of 2003. Investors who don't want to maintain a high-risk portfolio can look forward to Magnum MIP-G.