Sundaram S.M.I.L.E. Fund

Sundaram S.M.I.L.E. Fund

AUM `262.6 CRORE .................................................................................. AS ON MARCH 31, 2014

 NAV `49.12 ............................................................................................... AS ON JUNE 23, 2014

True to its name, Sundaram S.M.I.L.E fund has been able to bring smile to the faces of its investors. At least, that is what the performance of the fund indicates. In the last one year, the fund has outperformed its benchmark index CNX Midcap by a mammoth 3,193 basis points. If this is not enough for you to gauge the performance, then here is another instance of its outperformance: If you had invested `1,000 per month for the last three years, then your investment of `36,000 would now stand at `57,000.

Managed by S Krishna Kumar since 2006, the fund works with the objective of achieving capital appreciation by investing at least 65 per cent of its assets in diversified stocks that are generally termed as ‘small and mid-caps’. Small and midcaps are defined as any equity stock whose market capitalization is equal to or lower than the market capitalization of the largest market capitalization stock in CNX Midcap 200 index. It is not that the fund was immune to the slowdown that had engulfed the world in the year 2008 and 2009. But the fund has emerged a winner mainly because of its investment philosophy. It is a dynamically managed fund playing in the mid and small-cap spaces, with the cushion of up to 35 per cent in large cap stocks. The assets under management (AUM) of the fund as on March 31, 2014 stood at `262.60 crore.

Looking at the composition of its portfolio, the top five sectors constitute 77.22 per cent of its portfolio. The top five sectors are viz. Construction (24.87 per cent), Financial (18.24 per cent), Engineering (15.44 per cent), Automobile (11.44 per cent) and Healthcare (7.23 per cent). This sectoral asset allocation clearly exhibits that the tilt is towards cyclical sectors, which have once again come into the limelight post- elections, but the fund has also cushioned these with some safe sectoral bets like healthcare. The top five stocks that form part of its portfolio are Shasun Pharmaceuticals (6.37 per cent), HSIL (5.52 per cent), Karur Vysya Bank (5.39 per cent), V-Guard Industries (4.10 per cent) and Cummins India (3.32 per cent). Out of 49 companies that form part of its portfolio, mid-cap and small-cap companies constitute 96.90 per cent of the AUM, while the balance is held in exposure to large-cap stocks.

The improved performance of the fund has not come at the cost of risk-taking even on a conservative note as compared to its peers. This statement can be substantiated by looking at the sharp ratio which stands at 0.37. The alpha of the fund stands at 5.47, which represents the excess return that the fund has generated at a given level of risk. The fund can be an ideal candidate to be included in the mutual fund portfolio of both risk-taking as well as risk-averse investors. However, the SIP route for investors seems to be the best way to invest in this fund scheme.

S. Krishnakumar

Head- Equity, Sundaram MF