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Are happy days here again for SBI Funds

Are happy days here again for SBI Mutual Fund investors? After heavily losing in the ICE meltdown ea


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Are happy days here again for SBI Mutual Fund investors? After heavily losing in the ICE meltdown early this year, the basket of SBI Mutual's equity funds has put up a strong show in the last one month. The performance of the two sectoral funds, Magnum FMCG and Magnum Contra has also been impressive, with the two funds beating their peers by a wide margin. The top holdings of both the sectoral funds have made handsome gains in the last one-month and this has spurred the two funds, ahead of rivals. However, the sharp gains notwithstanding, the NAVs of both FMCG and Contra funds is still below par.

Take for instance, Magnum FMCG, which invests in stocks of fast-moving consumer goods. For the one-month ended September 8, the fund has returned a whopping 15.53 per cent, with its NAV vaulting from Rs 8.24 to Rs 9.52. On the other hand, the FMCG funds from Kothari Pioneer and Prudential-ICICI registered a mere 3 per cent gain, each during the same period.

The smart gains by Magnum FMCG are attributed to its top holding, Vikas WSP, which had a weight of 9.35 per cent on August 31, 2000. The scrip has vaulted by a whopping 150 per cent to Rs 1100-levels for the period under consideration. Vikas WSP has been one of the top holdings of the fund since its launch in August 1999. In fact, Magnum's only FMCG fund, which owns holds Vikas WSP in its portfolio.

However, does Vikas WSP qualify as an FMCG company? The company manufactures guar gum polymers (GGPs), which find applications in foods, oil drilling, textiles, mining, paper, tanning, pharma and cosmetic industries. GGPs are used as an ingredient in the manufacture of processed products like ice creams and personal products like toothpastes.

On the other hand, according to SBI Mutual Fund, FMCG are products that are typically purchased and consumed on a regular basis like personal products (soaps, toothpastes, hair oils), fabric care, processed foods (chocolates, ice creams), beverages and cigarettes. Thus, while Vikas WSP may not be an FMCG company per se, its product is used as an ingredient by a variety of sectors including FMCG companies.

The other stocks, which have aided the fund's rise are Mirza Tanners and Padmini Technologies, which have gained a whopping 64 and 101 per cent, respectively. The two stocks account for nearly 7 per cent of the portfolio. Mirza Tanners, which owns the popular Red Tape brand, is also only owned by Magnum FMCG. However, Padmini Technologies should not form a part of the FMCG portfolio now, since the company has recently changed its line of business and is exclusively focussing on multimedia and software businesses.

Magnum Contra, which invests in out-of-favour sectors, has also shown sharp gains with its NAV gaining 10.05 per cent for the one-month ended September 8 2000. The fund has also beaten its only competitor, Alliance Basic Industries comprehensively, with the latter gaining only 3.10 per cent during the month. The fund has been able to steer ahead with its top holdings of Bluedart, Sterlite and Bhel, which account for nearly 20 per cent of the total holdings. For instance, Bluedart has gained nearly 70 per cent in the last one-month while Sterlite has gained an impressive 53 per cent.

 
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