Going by the financial performance of companies in the March 2017 quarter, it is fairly evident that earnings growth is happening in patches. Barring a select few mid-sized companies, a large number of big companies are performing better than mid-sized ones. Given this situation, it makes sense to be with multicap schemes which not only capture the growth of large-sized companies, but also mid-and-small-sized companies.
Among the multicap schemes, SBI Magnum Multicap has distinguished itself as a steady performer with a reasonably good performance record. The scheme invests 56 per cent of its portfolio in largecap stocks followed by 34.1 per cent in midcap stocks and the remaining in smallcaps. This portfolio allocation helps the scheme’s fund manager capture growth stories in both large-sized and mid-sized stocks. Like most SBI equity schemes, this also focuses on companies whose growth potential is encouraging and quality of the management is good.
In the past six months, the scheme’s fund manager has taken contrarian calls on large sized companies that have sound management, impressive record of performance and established market share. A few prominent companies are Colgate-Palmolive (India), ICICI Bank, Mahindra & Mahindra and Shriram Transport Finance Company. Though share price of some of these may have been impacted due to some temporary structural issues, they have potential to rise, given the high earnings visibility.