SBI Magnum Global Fund: Investing in MNCs in uncertain environment

The equity market has been challenging over the past few months. The Nifty is down more than 2,000 points from its all time high. High inflation is providing headwinds to economic recovery from the COVID-19 pandemic. Central banks around the world e.g. US Fed, RBI etc. are adopting increasingly hawkish stances to rein in inflation. Historically, equities have underperformed in environment of high interest rates. The near term outlook for equities is uncertain because of the War in Ukraine, the slowdown in Chinese economy and impact of interest rate hikes on economic growth.

MNCs as an investment theme

In uncertain times, Multi National Companies (MNCs) can be good investment options for investors looking to diversify portfolio risk and providing relative stability in volatile markets. There are several reasons why MNCs are good investment options in volatile markets:-

• The revenue base of MNCs is not restricted to any particular geography. Different countries may have different economic cycles i.e. one country may outperform in terms of economic growth, when another country underperforms. Having revenue base diversified across several countries, help MNCs to be more resilient to economic slowdown in certain geographies.


• MNCs have strong balance sheets and the capacity to invest for growing their businesses. While domestic players have greater local market knowledge and connect, the investment capacity of MNCs can give them competitive advantage in times of economic difficulties.


• MNCs usually have strong global brands. Global brands enjoy pricing power and are better positioned to sustain their operating margins even in periods of high inflation and economic recessions.


• Some of the biggest MNCs in the world are technology players e.g. Alphabet (Google), Amazon, Netflix etc. Many of these companies have become global giants in a relatively short period of time. Technology has the power of causing major disruptions and these companies can continue to be beneficiaries of the disruptive power of technology.

Performance of MNCs versus broad market

The chart below shows the performance of Nifty MNC TRI versus the broad market index Nifty 500 TRI. You can see that the MNC index has outperformed the broad market index in the volatile markets. Even on the risk adjusted basis, the MNC index has performed well relative to the broad market index.

Source: National Stock Exchange, Advisorkhoj Research (as on 25^th May 2022). Disclaimer: Past performance may or may not be sustained in the future.

About SBI Magnum Global Fund

SBI Magnum Global Fund is a thematic equity mutual fund scheme which invests primarily in MNCs (minimum 80% of their assets). According to the scheme mandate an MNC should fulfil any one of these three criteria:-

• Major Shareholding is by foreign entity (e.g. Proctor and Gamble)


• Indian companies having over 50% turnover from regions outside India (e.g. Maruti Suzuki)


• Foreign listed Companies (e.g. Alphabet)

The scheme was launched in 1994 and has Rs 4,953 crores of assets under management (AUM). The expense ratio of the scheme is 2.03% (for the regular plan). The SBI Magnum Global Fund is helmed by veteran fund manager R.Srinivasan. The fund manager follows a bottom-up approach to stock-picking across industry sectors and market capitalization segments provided they meet the MNC criteria.

Performance of SBI Magnum Global Fund

You can see that SBI Magnum Global Fund has created alphas (outperformed the benchmark index) over long investment horizons.

Source: Advisorkhoj Research (as on 25^th May 2022). Disclaimer: Past performance may or may not be sustained in the future.

Performance Consistency

We have stated a number of times in our blog that, performance consistency is one of the most important characteristics of well managed mutual fund schemes. Rolling returns is the best measure of performance consistency because it is unbiased by market conditions. The chart below shows the 3 year rolling returns of SBI Magnum Global Fund versus its benchmark index over the last 10 years. You can see that, while the scheme historically outperformed the benchmark, it underperformed in the period from 2014 to 2018. Since then, it has been consistently been outperforming the benchmark.

Source: Advisorkhoj Research (as on 25^th May 2022). Disclaimer: Past performance may or may not be sustained in the future.

Wealth Creation

The chart below shows the growth of Rs 10,000 monthly SIP in SBI Magnum Global Fund over the last 10 years. With a cumulative investment of Rs 12 lakhs, you could have accumulated a corpus of around Rs 24 lakhs at an XIRR of 13.23%.

Source: Advisorkhoj Research (as on 25^th May 2022). Disclaimer: Past performance may or may not be sustained in the future.

Why invest in SBI Magnum Global Fund?

• In times of economic uncertainties, MNCs can be more resilient than domestic companies due to their diversified revenue base, stronger brand equity and financial strength.


• MNCs can provide stability to your portfolio in volatile markets and create wealth over sufficiently long investment horizons.


• SBI Magnum Global Fund is a proven wealth creator and has a strong track record of generating alphas for investors over long investment tenures.


• The fund manager has a strong track record across several equity schemes of different categories. SBI Mutual Fund, as an asset management company, also has a strong long term track record of performance across many product categories.


• If your core equity portfolio comprises of investments primarily in domestic companies, then SBI Magnum Global Fund can add diversification in your portfolio.

Who should invest in SBI Magnum Global Fund?

• Investors looking for long term capital appreciation through investments in MNCs.


• Investors with high risk appetites.


• Investors with minimum 5 years investment horizons.


• Investors looking toinvest in equities through SIP.


• Investors who want to invest in lump sum but are concerned about near term volatility, can invest in SBI Magnum Global Fund through 3 to 6 months STP from SBI Liquid Fund.

Investors should consult with their financial advisors, if SBI Magnum Global Fund is suitable for their investment needs