SBI Magnum Taxgain scheme is a mutual fund from SBI that helps you get tax benefit under section 80 C (the one with the one lakh limit), and primarily invests in equity. Before I go any further, let me state that there is a 3 year lock in period in this fund.
Over the years, I have heard a few people ask whether the lock – in applies if they don’t claim the tax benefit, and the answer is: Yes.
The lock in will remain intact regardless of whether you claim the tax benefit or not.
The Magnum Taxgain scheme will primarily be invested in equity, and at the end of February 2010 – it had 91.73% of its assets invested in equity. The fund leans towards large caps with Reliance Industries, ICICI Bank, L&T, United Spirits and GAIL being its top 5 holdings as on Feb 28 2010. It’s well worth noting here that the top 10 holdings of the fund make up 31.2% of its assets.
Over a 5 year period the SBI Magnum Taxgain fund has given annualized returns of 26.3% against Nifty returns of 20%. This page from Moneycontrol shows that this is among one of the better funds over a five year period. Its returns beat Nifty over a five year period which is a good thing, and the fact that it gives you tax benefits as well is just icing on the cake.
On a 1 – 5 scale – it has got a 4 rating from Value Research, and “Fund Return Grade” of “Average”.Â The minimum investment in this fund is Rs.500, and you can also set up SIPs in this plan.
In the past I have written about keeping the tax angle in mind while investing, and if you were thinking about some tax planning, then this is certainly one of the options you could check out.