The SBI Magnum Monthly Income Plan is an open-ended debt mutual fund offering by SBI Mutual Fund AMC. It seeks to provide investors with the dual benefit of capital appreciation and monthly income provided there is a distributable surplus available with the fund. To achieve this dual benefit objective, the SBI Magnum Monthly Income Plan would invest in fixed income securities such as money market instruments and debt securities. Additionally, there would be equity investments made into the fund to provide superior growth potential to the scheme.
About Debt Funds
Debt funds by definition are biased towards investments made into various money market instruments as well as debt securities. Both of the above are fixed interest rate investments that feature the benefit of being a lot more liquid as compared to equity investments. A smaller portion of the debt fund’s portfolio often includes equities as they provide a higher market-linked growth potential as compared to the fixed rate investments. In terms of risk, debt funds are featured on the moderate to lower side of the risk index as they tend to remain largely unaffected by market volatility.
Investment Objective and Strategy of SBI Magnum Monthly Income Plan
The key objective of this debt mutual fund from SBI Mutual Fund AMC is to provide regular income to the investor along with attractive long-term returns while ensuring adequate liquidity for the investors. The scheme will attempt to achieve these objectives through an actively managed portfolio consisting of debt, money market, and equity investments. The portfolio allocation of this debt fund across key investment segments includes up to 15% equity/equity-linked investments, 85% or more in debt instruments and no greater than 10% in securitised debt investments. There is also the additional caveat that an estimated 50% of the net assets of this mutual fund would be held in the form of various derivatives.
Fund Information and Statistics
Launch Date: The SBI Magnum Monthly Income Plan was launched over a decade back in March 2001.
Fund Type: This is an open-ended debt fund hence it is open for investment as well as redemption/switching as per the individual investor’s requirement. Being a debt fund, its investments would be biased towards money market and debt investments, while equities/equity-derivatives would form a smaller part of the portfolio.
Minimum Investment: For lump sum investments, the minimum initial investment amount of the scheme would be Rs.5000 and higher investment amounts will have to be in multiples of Rs. 1000 in addition to the initial deposit amount. In the case of SIP investments, the minimum single SIP amount starts as low as Rs. 500 per month for a minimum period of 12 months.
Risk Category: Being a debt fund with a high degree of liquidity, the SBI Magnum Monthly Income Plan feature a relatively lower level of risk to the principal amount invested as a result, it is deemed to be a mutual fund feature a moderate level of risk, which indicates minimal risk to the principal amount invested.
Entry/ Exit Load: As per SEBI directive, entry load in case of all mutual funds has been removed thus this debt fund does not feature an entry load. The exit load of this mutual fund is fixed at 1% provided units are redeemed or switched within 365 days of the units being allocated to the investor.
Fund Manager: The fund is managed by Mr. Dinesh Ahuja and Mr. Ruchit Mehta. Mr. Dinesh Ahuja has an experience of over 18 years in the financial sector and prior to joining SBI Mutual Fund, he worked with leading companies such as the Reliance Group and L&T Investment Management. His initial experience when starting out was on the sell-side as a fixed income dealer. Mr. Ruchit Mehta is also a financial industry veteran with a total experience exceeding 11 years. Prior to joining SBI Mutual Fund AMC, he was an assistant fund manager and analyst at HSBC Asset Management. Additionally, he has also worked in leading brokerages like Prabhudas Liladhar and ASK Raymond James.
Plans and Options Available
Direct Plan: This plan is available for investment through SBI Mutual Funds AMC either via the offline route i.e. the mutual fund distribution center or the online route through the AMC’s registered website. The benefit of this plan is the lower expense ratio, which tends to translate to higher overall returns as compared to the regular plan in the long term. However, the direct plan units feature as slightly higher NAV than the regular plan unit NAV of the fund.
Regular Plan: This is the most easily available plan for the investor to avail as it is available through the AMC as well as through various 3rd party mutual fund distributors such as Paisabazaar.com. The regular plan has a higher expense ratio and a lower NAV as compared to the direct plan but is preferred by most investors due to its larger corpus.
Dividend Option: The dividend option is available to investors of the SBI Magnum Monthly Income Plan in two variations – dividend payout and dividend reinvest. In the case of the dividend payout option, when the fund declares a dividend, it is automatically paid out in the form of a cheque or bank account credit to the investor based on the number of units available to the investor. In the case of the dividend reinvest option, the payout is automatically converted to units of same value and credited to the investor.
Growth Option: This option is available to an investor seeking long-term capital appreciation without any payouts during the time he/she is invested. Any profits generated in this case are invested further in making the fund’s NAV and AUM grow further. In this case, the capital gains benefits of the higher NAV are available to the investor at the time of switching/redeeming the units at a later date.
Leading Investments of the SBI Magnum Monthly Income Plan
The following are some of the leading debt investments of the SBI Magnum Monthly Income Plan*:
|Bonds||AAA||7.83% IRFC 2027, 7.95% Rural Electrification 2027, 7.35% National Highways Authority 2031, 8.36% Power Finance Corporation 2020, etc.|
|GOI Securities||Sovereign||7.88% GOI 2030, 7.59% GOI 029, etc.|
|Central Government Loan/State Development Loan||Sovereign||8.24% GOI 2027, 7.59% Karnataka State 2027, etc.|
|Bonds/NCDs||AAA||7.95% Rural Electrification 2027, etc.|
|Bonds/NCDs||AA-||9.55% Hindalco Industries 2022, 9.6% Hindalco Industries 2022, etc.|
|Bonds/Debentures||AAA||7.69% National Bank Agricultural and Rural Development 2032, etc.|
|Bonds/Debentures||AA+||8.25% Credila Financial Services 2021, etc.|
|Debenture||AAA||8.35% HDFC 2018, 7.27% Power Finance Corporation 2021, etc.|
|Debenture||AA+||8% Credila Financial Services 2022, etc.|
|Debenture||AA||8.75 Muthoot Finance 2020, 9.25% Tata Realty and Infrastructure 2019, 9.81% L&T Metro Rail (Hyderabad) 2035, etc.|
|Debenture||A+||10.05% AU Financiers 2020, 10.15% Equitas Finance 2019, Oriental Hotels 2019, 13.5% Janalakshmi Financial Services 2018, etc.|
*The aforementioned list of holdings is only for illustrative purposes and subject to periodic change in line with changing macro and micro economic factors. Equity and other derivative investments have not been included in the above.
How to Invest in SBI Magnum Monthly Income Plan through Paisabazaar.com
The free investment account offered by Paisabazaar.com is one of the simplest ways for an investor to start making investments into the SBI Magnum Monthly Income Plan. The account can be opened in minutes through the SEBI mandated Aadhaar-based e-KYC system and the investment amount can be paid using Internet Banking or ECS mandate through the investor’s registered Indian bank account. Subsequently, an applicable number of units will show up on the Paisabazaar.com account dashboard, where they can be held, redeemed or switched as per the investor’s requirement.