101537  |  INF903J01116  |  3 star  |  Neutral

NAV

$ 160.01

1-Day Total Return

0.08
%
INR | NAV as of 10/18/2017 9:30:00 AM | 1-Day Return as of 18 Oct 2017

TTM Yield

0.00%

Load

Multiple

Total Assets

5.1 bil

Expenses

2.85%

Fee Level

--

Turnover

85%

Status

Open

Min. Inv.

5,000

30-Day SEC Yield

--

Category

Large-Cap

Investment Style

Large Growth
Author
Morningstar's Take | 29/12/2016
by Kavitha Krishnan

The fund is currently being managed by Rahul Baijal, who took over management responsibilities from previous manager Shiv Chanani in October 2016. This is Baijal’s first stint at managing a mutual fund, given that his previous work experience included managing funds in the insurance sector. We would like to evaluate his style and execution of the strategy over a longer period before we build more confidence in the fund, the process, and the manager.

The investment team at the AMC has been restructured, with managers being assigned roles that reflect their areas of strength. While Baijal manages the AMC’s large-cap strategies, Chanani now manages flexi-cap strategies. Krishna Kumar manages their small and mid-cap mandates in addition to his role as the CIO of Equities. We think that the restructuring will yield positive results over the long term. However, we would like to evaluate the impact of these changes over a longer-term before we build more conviction on the team. 

The investment strategy for this fund tends to change in line with market sentiments. Launched in July 2002, Sundaram Select Focus was an aggressively run large-cap fund composed of roughly 30 stocks representing the manager’s highest-conviction picks based on three or four themes. In September 2010, the strategy was modified to a diffused portfolio of up to 50 stocks, with sector weights broadly in line with the index. An improvement in the economic environment has led to a slight reduction in the number of stocks, with the fund currently running a relatively concentrated portfolio.

Taking a concentrated exposure in a few companies further adds to the risk of the portfolio. An error of judgment on either sector or stock positions could lead to substantial underperformance with such a strategy. We think that these are early days for Baijal and we would like to evaluate his skills at managing this portfolio. We would also like to see the investment strategy take concrete shape and evaluate the strategy over the long term to draw confidence from it. Based on these changes, we think it prudent to assign a Morningstar Analyst Rating of Neutral on this fund for now.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

The fund has a significant bias to large caps.

People

A recent manager change and an internal restructuring restrict our conviction level.

Parent

The AMC has been working towards making positive changes.

Process

The fund runs a slightly concentrated approach with a meaningful investment in two or three sectors.

Performance

These are early days under the current manager. We would like to see long-term performance.

Price

The fund’s price is higher as compared with of the median for the category.

Important Disclosures

Unless stated otherwise, this report was prepared by the person(s) noted in their capacity as Manager Research Analysts (i.e., fund analysts) employed by Morningstar, Inc., or one of its affiliates. It has not been made available to the issuer prior to publication.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Manager Research Analysts’ expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities’ creditworthiness.

No material interests are held by Morningstar or the Manager Research Analyst in the financial products that are the subject of the research reports or the product issuer. Regarding Morningstar’s conflicts of interest: 1) Manager Research Analysts’ compensation is derived from Morningstar’s overall earnings and consists of salary, bonus and in some cases restricted stock; however, Manager Research Analysts are neither allowed to participate directly or try to influence Morningstar’s investment management group’s business arrangements nor allow employees from the investment management group to participate or influence the analysis or opinion prepared by them. Further information on Morningstar’s Code of Ethics policies is available from http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=540.xml

Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission.

For Recipients in India: Research on securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (“Investment Research”) is prepared by Morningstar Investment Adviser India Private Limited, which is registered with the Securities and Exchange Board of India. Your access to the Investment Research does not establish an advisory relationship with Morningstar Investment Adviser India. You should seek the advice of a financial professional before making an investment decision to ensure, among other things, that the security is suitable based on your particular needs and circumstances.

For Registered users only indicates the feature is available for Registered users only.
Top
Mutual Fund Tools
Feedback