The falling interest rates in the traditional deposit investments in banks and post offices have drawn the conservative investors towards various investment options available in the market for a regular income. Moreover, the market-linked asset portfolio with the primary aim of earning inflation-beating returns well above the traditional makes Mutual Funds attractive.
Accordingly, the Magnum Income Fund and the Conservative Hybrid Fund from the SBI Life Funds Management Ltd fit the bill for all individuals. Let us explore the two funds here in detail.
The retirees, homemakers, and first-time investors in Mutual Funds have a common goal – to earn consistent monthly returns to beat inflation and secure the investment. The SBI Life Magnum Income Fund and SBI Life Conservative Hybrid Fund have portfolios comprising mainly of debt assets with a marginal equity exposure for stable growth.
However, market volatility affects the delivery of a steady income. Consequently, the best option is a suitable SWP (Systematic Withdrawal Plan) for a stable monthly income stream regardless of the fund’s performance and the disbursal surplus.
The following grid illustrates the critical highlights and salient features of the SBI Life Monthly Income Plan.
Scheme Parameters | SBI Life Magnum Income Fund | SBI Life Conservative Hybrid Fund |
Category | Debt - Medium to long-duration fund | Hybrid |
Type | Open-ended | Open-ended |
Launch Date | 25 November 1998 | 9 April 2001 |
Available Plan | Regular and direct | Regular and direct |
Available Options |
|
|
Benchmark | Nifty medium to long-duration Debt index | NIFTY 50 hybrid Composite Debt 15:85 Index |
Load Structure | Entry Load: NA Exit Load: 10% within one year and 1% for remaining | Entry Load: NA Exit Load: 10% within one year and 1% for remaining |
Minimum Amount | Rs.5000 and multiples of Rs.1 SIP: Rs.500 to Rs.5000 | Rs.5000 and multiples of Rs.1 SIP: Rs.500 to Rs.5000 |
Risk | Moderately high | Moderately high |
AUM (31 March 2022) | Rs.1667.19 Cr | Rs.5795.54 Cr |
NAV (6 May 2022) | Rs.55.87 (Growth) | Rs. 52.63 (Growth) |
Fund Manager | Mr. Dinesh Ahuja | Mr. Saurabh Pant Ms. Manasi Saleja Mr. Mohit Jain |
SBI Life Magnum Income Fund: An open-ended medium to long-term scheme mainly investing in instruments with a Macaulay duration of 4 to 7 years. The portfolio bears a relatively high-interest rate and credit risk.
SBI Life Conservative Hybrid Fund: An open-ended hybrid scheme where debt instruments dominate the portfolio composition.
SBI Life Magnum Income Fund: The scheme suits investors searching for:
Regular income for medium to long term horizons
Investments primarily in debt and money market instruments
SBI Life Conservative Hybrid Fund: The product suits investors looking for the following:
Regular income with capital growth
The primary investment is in debt and money market instruments, while the second is in equity and equity-related instruments.
SBI Life Magnum Income Fund: The scheme offers investors the opportunity to generate a regular and steady income through primary asset allocation in debt and money market instruments. The fund manager focuses on investments with a Macaulay duration of 4 to 7 years. However, the scheme does not guarantee returns as there is no assurance of achieving the objectives.
SBI Life Conservative Hybrid Fund: The fund manager focuses on providing the investors an opportunity to invest predominantly in debt and money market instruments. On the other hand, the second investments are in equity and equity-related instruments. However, there are no guaranteed returns as there is no assurance of achieving the objectives.
After learning about the SBI Life Monthly Income Plan fundamentals, you must consult the offer document and satisfy that you are eligible to invest. Accordingly, the below listed qualified investors are only indicative.
Resident Indian adult individuals in a single or joint capacity with a maximum of three members
NRI’s, PIO, and OIC
Minors with parents or legal guardian
Karta, on behalf of the HUF
Companies, Corporate bodies, Public Sector Undertakings
Partnership firms
Registered societies, Association of persons, or body of individuals
Private, religious, endowments, and charitable trusts
Banks and other financial institutions
Army, Navy, Air Force, and other Para-military Organizations
Foreign Institutional and Portfolio Investors as also International Multilateral Agencies permitted by the Government and RBI
Other Mutual Fund Schemes, including SBI Life Mutual Fund Management Ltd.
The investment objectives of the two plans vary, but the common goal is to ensure a steady income flow through prudent investments and portfolio composition. Since you have chosen to invest in Mutual Funds, you are not short on the professional expertise of the fund managers focusing on maximizing returns.
Accordingly, the following qualifications to invest:
Retirees, homemakers, and first-time investors looking for inflation-beating steady income
Investments dominating the debt instrument
The investment horizon of 4 to 7 years
Conservative investors are not averse to marginal equity exposure after investing mainly in debt instruments
While the debt investment provides the fixed return component, the equity investment provides higher yields for a stable income.
The fund manager plays a crucial role in devising the investment strategy in harmony with the scheme’s objectives. Therefore, the main focus is on maximizing returns for the investors and meeting their aspirations for a regular income stream.
Let us study the strategies individually.
After continuous evaluation, the fund manager considers the investment’s economic factors and market dynamics. Accordingly, the entire asset allocation is in debt and money market instruments for risk-adjusted returns through active management. In addition, the fund manager adheres to the Macaulay Duration of 4 to 7 years defined in the scheme objective.
The grids below represent the SBI Life Magnum Income Fund’s asset allocation on two critical factors.
SBI Life Magnum Income Fund – Asset Allocation | |||
Instruments | Minimum | Maximum | Risk Profile |
Debt | 0% | 100% | Low to medium |
REITs and InVITs | 0% | 10% | Medium to high |
Securitized Debt | 0% | 20% | Medium to high |
SBI Life Magnum Income Fund – Sector Based Asset Allocation | |
Industry | Percentage of Net Asset |
Financial services | 34.74% |
Sovereign | 33.47% |
Construction | 7.89% |
Services | 6.70% |
Power | 6.56% |
Automobile | 4.25% |
Metals | 2.72% |
Cash, Cash Equivalents, and Others | 3.67% |
Grand Total | 100.00% |
The scheme’s fund manager allocates assets in a mix of debt, equity, and money market instruments in harmony with the fund objectives. Market dynamics, macro-economic factors, and issuer-specific factors help evaluate the portfolio composition to earn maximum returns for the investors. As a result, the equity cap is 25%.
The grids below represent the SBI Life Conservative Hybrid Fund’s asset allocation on two critical factors.
SBI Life Conservative Hybrid Fund – Asset Allocation | |||
Instruments | Minimum | Maximum | Risk Profile |
Debt | 75% | 90% | Low to medium |
REITs and InVITs | 0% | 10% | Medium to high |
Equity and Related | 10% | 25% | Medium to high |
SBI Life Conservative Hybrid Fund – Sector Based Asset Allocation | |
Industry | Percentage of Net Asset |
Financial Services | 40.89% |
Sovereign | 16.88% |
Construction | 5.87% |
Services | 4.39% |
Consumer Goods | 3.94% |
Automobile | 3.55% |
Telecom | 2.83% |
Textiles | 1.74% |
Power | 1.62% |
Chemicals | 1.61% |
Consumer Services | 1.49% |
Cement and Cement Products | 1.12% |
Miscellaneous | 2.28/% |
Cash, Cash Equivalents, and Others | 11.79% |
Grand Total | 100.00% |
The Asset Management Company (AMC) is a joint venture between SBI Life and Amundi of France. While the former is the largest Indian holding 63% of the stake in the company, the latter provides strategic support by introducing international best practices and standards.
The AMC has been operating in India for over thirty years, actively endeavoring to outperform the benchmarks through well-researched and focused investments in the equity market.
Mutual Funds have opened up the Indian investment market with consistent inflation-adjusted returns compared to the traditional deposit schemes. Moreover, the investments reap higher yields from market instruments providing flexibility and liquidity that makes it an attractive vehicle.
The SBI Life MF Magnum Income Fund and Conservative Hybrid Fund are two options eminently suited to conservative investors searching for a steady income to supplement their regular income.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
*Please note that the quotes shown will be from our partners
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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