SBI Magnum Tax Gain is an ELSS tax saver mutual fund offered by SBI Mutual Funds to investors who are interested in capital appreciation over the medium to long term. Being an equity-based investment plan, the SBI Magnum Tax Gain scheme is expected to feature a relatively high level of risk with potentially high rewards for those opting for this scheme. SBI Mutual Funds is among the largest fund houses currently operating in India and its SBI Magnum Tax Gain’s portfolio is expected to comprise primarily of various equity shares as well as equity-related schemes in order to ensure long-term capital appreciation for the investor. However, a smaller portion of the SBI Magnum Taxgain portfolio is expected to include debt investments such as money market instruments in order to ensure liquidity and constant returns for the scheme.
What is an ELSS fund?
ELSS is the acronym for equity-linked savings scheme and it comprises of various investment that includes mainly various equity investments and investments into equity-related schemes in order to provide long-term capital appreciation for the investor. However, unlike other equity mutual funds, ELSS has the advantage of being a tax-saving investment option under Section 80C of the Income Tax Act, 1961. Moreover, an ELSS tax saver mutual fund has the shortest lock-in period of 3 years among all tax saver investment options. In the case of ELSS funds, though the majority of the investments are made into equities, a smaller portion usually less than 20% of the portfolio of the scheme would be invested in debt instruments to provide liquidity for the scheme.
SBI Magnum Tax Gain
The key objective of the SBI Magnum Tax Gain Scheme is to provide investors with the benefit of investing in a portfolio comprised mainly of equity shares as well as investments related to equities which are capable of offering tax-saving benefits to investors. These benefits would be provided under the Section 80C of the Income Tax Act, 1961 which features an exemption limit of Rs. 1.5 lakhs. An additional objective of this scheme is to distribute income from time to time based on the distributable surplus that is available with the SBI Magnum Tax Gain Scheme.
Inception: The SBI Magnum Tax Gain Scheme was first opened for subscription on the 31st of March 1993. This ELSS tax saver fund uses the S&P BSE 100 as its benchmark.
CRISIL Rank: CRISIL rank provides an idea regarding how well a fund has performed in the recent past and better performance leads to better ranking. On a scale of 5, the CRISIL rank for SBI Magnum Tax Gain is 3, which represents average performance or marginally below performance in the ELSS category.
Risk Level: ELSS funds invest a majority of their portfolio in various equity and equity-related schemes, hence the SBI Magnum Tax Gain Scheme may be adversely affected by low liquidity. Moreover, equity investments are considered to be comparatively higher risk investment options due to their close linkage to stock markets. As per SBI Mutual Funds, the SBI Magnum Tax Gain Scheme is prone to various investment risks including possible loss of principal invested. The following are the scheme-specific risks of SBI Magnum Tax Gain Fund:
- Liquidity of scheme would be restricted based on settlement periods and trading volumes.
- Possibility of extended trading restrictions when the fund is witnessing a large quantity of redemption or when the portfolio is undergoing significant restructuring
Risk Control: In order to control the possible risk resulting from above-mentioned factors as well as other factors, SBI Mutual Funds has engaged a separate risk management division with a separate risk management committee for the SBI Magnum Tax Gain Scheme. Key functions of this committee include:
- Reviewing the overall performance of the risk management framework in order to ensure sound corporate governance rules are followed
- Regular review of various risk management policies
- Regular review of various risk management processes
- Periodic review of senior management’s handling of the scheme
- Reviewing the risk reporting regarding various types of fund risk including asset quality, concentration, risk characteristics, nature, amount, etc.
Entry Load: No entry load is applicable for an investor seeking to invest in the SBI Magnum Tax Gain Fund. The removal of entry loads in mutual funds by SBI Mutual Funds is due to a SEBI mandate that has been issued to all AMCs operating in India.
Exit Load: No exit load is applicable in the case of the SBI Magnum Tax Gain Fund as the minimum lock-in period for the investor is 3 years and exits load is applicable in the case of equity investments that are liquidated before completion of 1 year from the period of investment.
Fund Manager: The current fund manager for the SBI Magnum Tax Gain Fund is Mr. Jayesh Shroff. He has been managing this fund from October 2008, which was about 6 months from the first issue of the fund. Prior to joining SBI Mutual Funds as a fund manager, Mr. Shroff had been involved with capital markets in various other companies.
Investment Strategy: As mentioned earlier, the focus of investments for the SBI Magnum Tax Gain Fund is to invest in a range of equity as well as equity-related investment options. Though these would comprise a major part of the investments made by the Fund, SBI Magnum Tax Gain would also invest in a range of debt and money market investments to enhance liquidity and provide diversification to the investments. Some of the key debt and money market investment options for this SBI mutual fund would be reverse repo, repos, notice/term money market, money market as well as any alternatives to calling money market investment that is acceptable to the Reserve Bank of India.
Plans and Options for SBI Magnum Tax Gain Fund
This SBI Magnum Tax Gain mutual fund offers both growth and dividend plans to its prospective investors. The Dividend option additionally features two unique categories of Dividend Reinvestment and Dividend Payout options. The following are some key details of the various plans and options that are available to investors of the SBI Magnum Tax Gain Scheme.
Direct Plan: An investor opting to invest in SBI Magnum Tax Gain through the direct plan gets the benefit of not having to pay any brokerage or portfolio management fees, which would increase the potential returns of the scheme in the long term. In order to make investments through this route, the investor has to approach the mutual fund company directly either online or through the offline route. This option is not available if a 3rd party broker or brokerage house is involved in the investment process. Options available under the direct plan include growth and dividend options.
Retail/Regular Plan: The retail or regular plan is available to all investors whether they are investing through a brokerage or directly with SBI Mutual Funds. In the case of regular plans, there may be additional brokerage and portfolio management fees that bring about the increased expense ratio of these plans. This plan usually features a lower NAV as compared to the Direct Plans. If an investor opts for the regular plan of SBI Magnum Tax Gain Scheme, he/she will not be charged any portfolio management or brokerage charges. In fact, such charges will also not be applied in case the investor transfers his/her portfolio from a different brokerage to Paisabazaar.com. The regular plan of SBI Magnum Tax Gain includes both growth and dividend options.
Growth Option: In this option, the investor does not receive any money during the time they remain invested in the SBI Magnum Tax Gain Scheme. This is because any profits that the scheme makes are invested back into the scheme, which increases the NAV of the scheme and are available as a profit for the investor at the time the investment units are redeemed after completion of the lock-in period.
Dividend Option: Unlike the growth option, the dividend option is characterised by periodic payouts that occur whenever the scheme declares a dividend. This can occur only if the scheme makes a profit and on declaring dividend, the NAV of the scheme’s units decreases by a proportionate amount. In case of the dividend re-invest option, the dividend declared is automatically converted into additional units of the SBI Magnum Tax Gain fund and added to the number of units that are currently available. If the investor opts for the dividend payout option, the dividend declared is directly credited to investor’s registered account with SBI Mutual Fund AMC.
Key Holdings of SBI Magnum Tax Gain Fund
The following are some top investments across equities that have been made by SBI Magnum Tax Gain Fund*.
|Banking & Financial Services||State Bank of India, ICICI Bank, HDFC Bank, M&M Financial, HDFC, ICICI Prudential, Kotak Mahindra, etc.|
|Information Technology||Infosys, Tech Mahindra, Cyient, Persistent, HCL Technologies, etc.|
|Automotive||Mahindra and Mahindra, Tata Motors, Bosch, Hero Motorcorp, etc.|
|Manufacturing||Bharat Electrical, Max Financial, Page Industries, etc.|
|Pharmaceuticals||Aurobindo Pharma, Sun Pharma, Laurus Lab, Strides Shasun, Sequent Scientific, Divis Labs, etc.|
|Others||Reliance, Indian Tobacco Company, CESC, Century, Bharti Airtel, Blue Dart, Hindustan Unilever Limited etc.|
|Food and Beverages||Nestlé, GlaxoSmithKline Con, United Breweries, Manpasand Beverages, Britannia, etc.|
|Chemicals||UPL, Atul, etc.|
*The above list is indicative and subject to periodic change as per business requirements of SBI Mutual Fund AMC and SEBI guidelines.
Minimum Investment Guidelines for SBI Magnum Tax Gain
The SBI Magnum Tax Gain mutual fund is available for investment both in the form of lump sum investments as well as through SIP investments. In the case of lump sum investment, the minimum first-time investment amount is set at Rs. 500 and higher amounts for investment would be in multiples of Rs. 500. The additional purchase amounts allowed in case of lump sum investments are also a minimum of Rs. 500 and higher investments in multiples of Rs. 500.
In the case of investment in the SBI Magnum Tax Gain ELSS fund, the minimum single SIP amount is fixed at Rs. 500 for a minimum period of 6 weeks. In the case of a monthly SIP, the minimum for an individual SIP is fixed at Rs. 500 for a minimum of 6 months. Higher amounts can be considered as multiples of Re.1 over Rs. 500 and the monthly SIP installments can be continued for 12 months or more. Quarterly SIP options are also possible through minimum individual SIP investments of Rs. 500 for a year. Higher SIP amounts for quarterly SIP can be in the form of multiples of Re. 1 over the minimum Rs. 500 individual investment.
Investing in SBI Magnum Tax Gain through Paisabazaar.com
The Paisabazaar.com website features an investor’s section where any resident Indian who is over 18 years of age can invest in mutual funds of his/her choice provided they can complete the SEBI mandated KYC requirements. Once the free Paisabazaar.com mutual fund investment account has been created and activated, the prospective investor can log into the account and start purchasing mutual funds through net banking.
On the Paisabazaar investment account dashboard page, there is an easy to use search box, where an individual can type in the fund of their choice such as “SBI Magnum Tax Gain” and select the fund name from the drop down menu to select a specific mutual fund and know about its 1 year, 3 year and 5 year returns. The prospective investor can also easy compare their chosen mutual fund option with respect to other mutual funds featured on the Paisabazaar.com platform. Once the investor has made his/her choice, clicking on the “Buy” button redirects them to a new page where the option of the lump sum or SIP investment is available. After choosing the appropriate option, the investor will have to input the total amount that they intend to invest. In the case of SIP investments, an additional field of SIP tenure i.e. the total time over which the SIP will be completed needs to be filled in. Once these fields and other details are filled out completely, the investor is directed to the Netbanking page of their registered bank to complete the transaction. The units are allocated as per the applicable NAV within the next 3 working days.
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