Sundaram Select Mid Cap sticks to its core mandate of investing in smaller fare. The fund completed 12 years on July 31, 2014, and its annualised return over this period has been a spectacular 31%. Our analyst believes that long-term investors in this fund are well rewarded and the fund merits a silver rating.
To understand the analyst rating in more detail, click here.
- The fund had a change on the management front in November 2012 when Krishna Kumar took over the reins from Satish Ramanathan. Investors can view this positively because Kumar is a proficient portfolio manager and an astute stock picker. He is no new kid on the block, but has been with the fund house for 11 years and has managed the other mid-cap fund – Sundaram SMILE, since December 2006.
- A noteworthy aspect of the fund is its tight adherence to the mandate. Unlike a typical mid-cap fund that tends to invest 20-30% in large-cap stocks to manage liquidity, the fund manager has largely avoided investing in large-cap stocks. As a result, the portfolio has roughly 90% of the assets in small and mid caps versus 70% for a typical peer.
- Patience is considered a virtue in investing and one that Kumar apparently seems to identify with. Since identifying companies with long-term growth prospects is the endeavour of the fund manager, he prefers a buy and hold approach for his high conviction ideas. The typical holding period for such stocks ranges from 3-5 years. This is borne out by the low turnover ratio of the fund.
- There have been times in the past when the fund has a significant cash allocation, known to touch 18%. However, this aspect has changed since Krishna Kumar began managing the fund. He prefers being invested in equities at all times.
To read the analyst note on Sundaram Select Mid Cap, click here.
