Why Should You Invest in SBI Magnum Low Duration Fund?

There are a number of ways in which you can invest, the one trending these days is investment in mutual funds. There are numerous options present in the market in the form of innovative investment schemes. SBI Magnum Low Duration Fund by SBI Mutual Fund is one among the many suitable for conservative investors.

The investment objective of this scheme is to help investors earn regular income by investing in debt and money market instruments by providing liquidity at all times. This is an open-ended scheme with the macaulay duration of the investment lying between 6 to 12 months. Formerly, this scheme was known as SBI Ultra Short Term Debt Fund.

Top Four Reasons to Invest in SBI Low Duration Fund Growth

Below reasons, as to why one should invest in this scheme, have been shortlisted by the experts at MySIPonline after conducting intensive research.

1. Asset Diversification - This scheme has invested across different low duration securities which include AAA, A1+, AA, cash equivalent, etc. Diversifying the assets across a variety of instruments is a right decision as it leads to diversification of risk. The correct selection of the investment portfolio also increases the chances of better earnings.

2. Good Returns - In one year time period, the rate of return generated by this scheme is 6.63% which is more than both its category and benchmark CCIL T Bill Liquidity Weight. In three years time, the returns generated by this scheme is though more than that generated by its benchmark but less than its category’s returns. Talking of the five years time period, it has again succeeded in surpassing the return rate of both the others.

3. Robust Risk Management System - The standard deviation of this scheme is more than its benchmark’s SD but less than its category’s standard deviation. The Beta of the scheme is again less than that of its category. This states that the scheme is less likely to fluctuate in response to the market conditions. The Sharpe ratio of this scheme is 1.27 which is greater than both its benchmark and category’s ratio. This confirms that it has generated good return with the risk taken.

4. Consistent Performer - Talking of consistency, this scheme has generated continuous returns for one, three, five, and seven year in the form of 6.63%, 7.33%, 8.09%, and 8.38%. Looking at these rate of returns, it can be estimated that the performance of this scheme is consistent. Below is the performance graph showing the trailing returns for the period of October 2017 to September 2018.

A Final Note

Investors who wish to park their money for a short-term may invest in SBI Magnum Low Duration Fund by SBI MF. From the above description, it can be estimated that this fund seems to yield optimum and consistent returns with proper risk management and asset allocation. You may invest in it via simple online investment procedure at MySIPonline. In case you have any query regarding regular funds, feel free to post the same here.

What Goals Can Be Achieved Through SBI Dynamic Bond Fund?

Dynamic bond funds are expected to provide optimal returns in the rising as well as falling interest rate scenario, both, by actively managing the portfolio. So, if you a risk-averse investor and looking for investing your capital in a debt fund, then SBI Dynamic Bond Fund is suitable for you. The fund aims to earn optimal returns for the investors in the different economic and fiscal conditions prevailing in the market by churning the portfolio according to it. Keeping all this in mind, the financial analysts of MySIPonline have researched about the scheme, and also provide the details of who should invest in it.

Description	Details
Launch Date	Feb 09, 2004
Category	Debt: Dynamic Bond
NAV (As on Sept 25, 2018)	Rs 21.52
AUM (As on Aug 31, 2018)	Rs 1,239 Cr
Expense Ratio	1.69%
Min. Investment	Rs 5,000
Min. SIP Investment	Rs 1,000
Return Since Inception	5.38%

The fund mainly invests in the debt securities and money market instruments depending on the expected interest rate scenario. It aims to provide high returns to the investors by including high-quality debt securities of varying maturities in its portfolio.

Portfolio Allocation of SBI Dynamic Bond Fund (G)

As per the financial analysts of MySIPonline, the management team of SBI Dynamic Bond follows an active duration management strategy which has kept its portfolio turnover ratio high with 131%.

Portfolio Aggregates	Fund	1Y High	1Y Low	Category
Number of Securities	10	19	7	24
Modified Duration (yrs)	2.49	6.87	0.91	2.63
Average Maturity (yrs)	3.22	10.91	2.10	3.64
Yield to Maturity (%)	7.70	7.71	6.29	8.22

*As on Sept 25, 2018

With deep-rooted research philosophy, the fund management team constructs the portfolio with significant focus on the liquidity in the portfolio and avoids taking high credit risk. It mainly invests in the high credit quality medium interest rate sensitive papers. These majorly include GOI securities, Central Government loans, and certificate of deposits of AA, AAA, SOV and A1+ rating.

Past Performance Analysis of SBI Dynamic Bond Fund (G)

Fund/ Benchmark	Trailing Returns (in %)
	1-Y	3-Y	5-Y	7-Y	10-Y
SBI Dynamic Bond Fund (G)	0.55	7.03	8.06	8.24	7.36
NIFTY Composite Debt Index	2.79	6.1	7.49	7.45	7.01
Category	1.08	6.48	8.17	8.35	7.85

*As on Sept 25, 2018

Following the disciplined and risk-cautious investment procedure, SBI Dynamic Bond Fund growth has generated high returns in the long run. As shown in the table above, the fund has managed to beat the benchmark efficiently in the long run, and provided competitive returns as compared to the category’s average. With these returns, the fund has generated high alpha as compared to the other funds in the category.

These returns and risk measures prove that the fund is capable to offer high returns in the long investment period to the investors. It has also capped the losses in the year 2009, when the benchmark has given negative returns, but it has provided high positive returns.

Suitability: SBI Dynamic Bond Fund (G)

The investors who are looking for investing in this fund should know that it offers a moderate level of risk on the principal amount. So, investors who have to achieve the financial goals such as buying a car, creating a corpus for construction of house and similar within the investment horizon of 3 to 5 years, should invest in it. At the same time, the investors must keep in mind that the rates of RBI keeps fluctuating according to the economy, so if your investment period falls below 3 years, you should avoid investing in the scheme.

 You can invest in SBI Dynamic Bond Scheme via SIP and lumpsum mode to reach your expected goals, but if you are confused with how to initiate or how much to invest, you can consult with our experts at MySIPonlinewho will help you to reach your aim easily.