SBI Mutual Fund launches second SIF strategy focused on stocks outside top 100 companies

This is an open-ended strategy that will primarily invest in companies outside India’s top 100 listed firms by market capitalisation while using limited short positions through derivatives to manage risk.

The new fund offer (NFO) will open for subscription on August 7 and close on August 20.

The strategy aims to generate long-term capital appreciation by investing mainly in equity and equity-related instruments of companies beyond the top 100 by market capitalisation. It will also use limited short exposure through equity derivatives to seek enhanced returns and manage portfolio volatility. The fund house noted that there is no assurance that the investment objective will be achieved.

Investment strategy

According to the scheme details, the strategy will invest:

• 65% to 100% in equities and equity-related instruments of companies outside the top 100 by market capitalisation, including REITs.
• Up to 35% in equities of the top 100 companies.
• Up to 35% in debt and money market instruments.
• Up to 20% in InvITs, within SEBI-prescribed limits.
• Up to 35% in mutual fund units, including Gold and Silver ETFs.
• Up to 35% in overseas securities such as foreign equities, ADRs, GDRs, overseas ETFs and debt instruments, subject to regulatory limits.

Exposure to gold through mutual fund schemes will be capped at 5% of the strategy’s net asset value.

The benchmark for the strategy is the BSE 500 Total Return Index (TRI).

Investment threshold

The Specialised Investment Fund framework is meant for investors with higher investment capacity. New investors will need to invest a minimum of ₹10 lakh to enter Magnum SIF.

Existing investors can invest ₹1 lakh per application, provided their aggregate investment across Magnum SIF strategies remains at least ₹10 lakh at the PAN level.

The strategy will levy an exit load of 1% if units are redeemed or switched out within three months of allotment. No exit load will apply after three months.

The fund will be managed by Gaurav Mehta, Head – SIF Equity at SBI Funds Management, who also manages the Magnum Hybrid Long Short Fund, the fund house’s first strategy under the SIF framework.