SBI Magnum TaxGain 1993-Part 1
What is SBI Magnum TaxGain Scheme about?
Magnum TaxGain Scheme is an Equity Linked Savings Scheme (ELSS) from SBI Mutual Fund which offers investors tax benefits on an investment upto Rs 1 Lakh under Section 80C of Indian Income Tax Act 1961. The fund was launched in the year 1993 and is one of the top performers in the ELSS category.
Entry Load – Investments below Rs. 5 crores – 2.25%,Investments of Rs.5 crores and above – NIL"
SIP/STP Entry Load - 2.25%
Exit Load : NIL
SIP : Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter - 12 months.
STP : Minimum amount Rs.1000/- month - 6 months, Rs.3000/ Quarter - 6 months.
Asset Allocation – 80-100% in Equity, partly convertible debentures and fully convertible debentures and bonds & 0 – 20% in Money market instruments.
Minimum Application Amount – Rs 500 for purchase & Multiples of Rs 500 for additional purchase.
Plans & Options – Dividend option with payout and reinvestment facility.
In respect of STP transactions, an investor would now be permitted to transfer any amount from the switch-out scheme, subject to a minimum transfer of Rs.1000 pm or Rs.3000 per quarter, without any restriction on maintaining the minimum balance requirement as stipulated for the switch out scheme. The minimum period for STP will be atleast 6 months.
Enter Section 8OC.
Section 88 was scrapped in Finance Bill 2005. Instead, Section 80C has been introduced. All avenues that were eligible for tax benefits under Section 88 were brought under the Section 80C fold. However, instead of offering tax rebates, investments (up to Rs 100,000) under Section 80C qualify for deduction from gross total income. Hence a new system of claiming tax benefits is now in place.
How have Equities performed as compared to other asset classes?
Track record of the last 15 years shows that equity investments give better returns over the long term. Other asset classes such as Fixed Deposits & Gold have given returns of 5.7% & 10.3% respectively as compared to 15.6% provided by equities (BSE Sensex). (Cumulative annualized returns from 1984 to 2004). We believe that a 3 year horizon is ideal for getting a reasonable return from equity.
Why should I invest in Magnum TaxGain Scheme?
Magnum TaxGain Scheme offers you tax savings upto Rs 33,360 (Calculation based on applicable income slab, tax amount, surcharge & education cess) on an investment of upto Rs 1 Lakh. It also gives you equity market linked returns.
Returns of Magnum Taxgain Scheme
As on 31 January, 2006 FUND CATEGORY BENCHMARK
1-Years 105.57% 59.77% 48.36%
3-Years 99.60% 63.65% 48.28%
5-Years 32.13% 29.82% 18.77%
Return Since Launch 19.62% – 13.55%
Please note that past performance may or may not be sustained in future.
What is the investment strategy of Magnum TaxGain Scheme?
Magnum TaxGain Scheme follows the bottom up investment strategy. The portfolio size limited to about 35 stocks in all. The strength lies in the ability to identify promising stocks and take them in the portfolio. This strategy has worked in favour of the fund in the last couple of years.
Awards & Achievements:
Magnum TaxGain Scheme has been ranked CPR 1 by CRISIL which indicates ‘very good performance’ It has recently bagged 2 gold awards in the 1 year & 3 year category for performance in the ICRA Online Awards. Magnum TaxGain Scheme has consistently given dividends and the last dividend given was 102% in June 2005.
Does a high NAV reduce the value of my investment?
It may be added by way of clarification that an NAV of Rs.50 in an existing scheme, and an NAV of Rs.10 in an New Fund Offer (NFO) are exactly the same for a new Investor, unlike in a share during an IPO. Two funds with exactly the same portfolio generate the same percentage of return in a given period irrespective of the magnitude of the NAV. Any time is hence the right time to invest!
Please read the Offer Document before investing.