The Hindu Business Line : Sundaram Midcap asset size grows 7pc

NIMBLE investors chasing immediate gains may have helped significantly boost the size of Sundaram Select Midcap equity fund in November ahead of a dividend announcement of Rs 4 for each unit.

The size of the scheme, part of Sundaram Mutual Fund, was Rs 106 crore on November 20, more than twice its size at the end of October. "Our performance was really noticed," explained Mr Sanjay Santhanam, Vice-President - Marketing & Sales, at Sundaram Mutual.

Sundaram Select Midcap's asset value grew by 7 per cent in November even as its benchmark, Nifty Junior, stayed at the same level.

A couple of industry hands, however, felt that a sharp growth in the size of mutual fund in the run up to dividend needs to be viewed with caution. Dividends are not taxed in the hands of unit holders, and money tends to migrate to funds that are expected to declare a dividend.

For example, the investment pattern in another fund, HDFC Top 200, suggests that dividend may trigger significant investment. The fund declared dividend towards the end of October 2003. During the month, Top 200's size grew by 64 per cent to stand at Rs 624 crore.

Industry hands said it would take a few months after dividends to get a sense of a fund's attraction to investors interested in more than immediate benefits.

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