SBI MSFU Emerging Business Fund

SBI Magnum Sector Funds Umbrella Emerging Business fund is one of the better performing funds in its category. This fund is managed by R Srinivasan who has over 18 years experience. He has been managing the fund from May 2009. This fund is a top performing one in its category. Its returns have been high and have beaten its benchmark in most periods yet the 5 year returns prompts to be cautious about fresh investments. If you already hold units in this fund you can continue to do so. This fund’s portfolio allocation deems it suitable for those who are prepared to swallow big risks in a market downturn.

Where does SBI MSFU Emerging Business Fund invest your money?

SBI MSFU Emerging Business Fund is a concentrated small and mid cap fund investing in emerging sectors which means most of your money will be invested in medium and small size companies in sectors currently selling like hot cakes. And for stability it invests in large cap companies as well. It seeks to invest in businesses having growth potential due to export or outsourcing opportunities. It has 47% exposure to companies in the mid cap segment, 38% exposure to companies in the small cap segment and about 12% in companies in the large cap segment.

Suitable for what?
  • Creating Wealth
  • Lifestyle goals
Not suitable for what?
  • Child's education
  • Child's Marriage
  • Home Purchase 
  • Planning for retirement
How much to invest?

Minimum one time investment is Rs 2000 and minimum SIP is Rs 500 per month. Do not make SBI MSFU Emerging Business as part of your core portfolio. Core portfolio is investments that are made for your basic goals and makes up about 70% of your investment portfolio. SBI MSFU Emerging Business Fund can be part of your satellite portfolio. Do not do the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your satellite portfolio.

Our recommendation for fresh investment
Recommended
Our recommendation for existing investment.
Recommended
How has SBI MSFU Emerging Business fund performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Oct 2004, your value of investments would be around Rs 5.23 lakhs. If you had invested Rs 1 lakh five years back it would have become Rs 1.40 lakhs. The performance has been better or similar to other mutual funds in this category. The fund has been giving at around 7% every year for those who stayed invested for last 5 years.

Assume you had invested Rs 10,000 every month in SBI MSFU Emerging Business through SIP for the past 5 years today you would have around Rs 10.41 lakhs.

How will SBI MSFU Emerging Business fund perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for satellite portfolio should be to achieve higher returns than on the best diversified equity funds.

When to review the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10,000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of SBI MSFU Emerging Business fund is 2.36%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

When to enter ?

Now! There is no good time to invest rather than now. Do not try to time the market and especially if it is an SIP. Do not follow news channel and other experts trying to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

When to exit?

Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you do not withdraw within 1 year. SBI Magnum Sector Funds Umbrella Emerging Business Fund does not qualify for sec 80C ELSS benefits.

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