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Sundaram Newton revamps brokerage structure

Our Bureau

CALCUTTA, Dec. 14

SUNDARAM Newton Mutual Fund has revamped brokerage structures for select schemes, following feedback from some of its distributors. The new structures, to be effective from December 15, would relate to Sundaram Growth Fund, Sundaram Balanced Fund and Sun daram Tax Saver.

Upfront brokerage for Sundaram Growth Fund, the flagship equity scheme, has been reduced for two slabs - for amounts less than and over Rs. 25 lakhs, from 1.75 per cent to 1.25 per cent, and from 1.25 per cent to one per cent respectively.

The upfront payments (of whatever amount of subscription) for the balanced and the tax-saving schemes stay at one per cent.

However, the trail commissions applicable to these have been increased. The Day-1 trail, for instance, has been upped from zero to 0.3 per cent for Sundaram Balanced Fund.

There have been changes in the growth fund's trail commission structures as well. For subscriptions both more and less than Rs. 25 lakhs, the Day-1 and Day-366 trails would henceforth be 0.3 per cent (again, up from zero).

Mr. T.P. Raman, Managing Director of Sundaram Newton AMC, has informed intermediaries that the fund has met quite a few of them over the past three months, during the course of its presentations on equity schemes.

Mr. Raman's communication to distributors covers certain aspects of Sundaram Growth Fund. These include ``equity type returns'', and ``performance across sectors''.

As for the first, a study of the BSE Sensex, as conducted by the fund, has been cited. It shows that ``a diversified equity portfolio, representative of Corporate India, is very reliable in the long run, having given returns between 15-20 per cent on a 1 0-year holding''.

This, the MF has stated, is its definition of equity-type returns, to which it has sought to add value through proactive fund management.

Sundaram Newton's idea of performance across industries has stemmed from the growth fund's investments in eight sectors.

The returns generated from six of these have shown that the fund's performance has not been uni-dimensional. In other words, performance has not been a factor of a stand-alone segment like technology.

The contributing sectors are TMT (the contribution of technology/media/telecommunications being 56 per cent), pharmaceuticals (25 per cent), finance (17 per cent), FMCG (14 per cent) and cyclicals (five per cent). The two losers are automobiles (a negati ve 11 per cent) and industrials (minus 15 per cent).

The fund has predicted that sector funds, or funds that concentrate investments excessively, are extremely unpredictable.

``Concentrated correctly, they can do much better than a diversified equity fund. But if they are concentrated wrongly, they can, and will, do much worse. Reliability gets lost in the process'', it has maintained.