• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Aarati Krishnan

LAUNCHED in the midst of the market meltdown in June 2004, Sundaram India Leadership Fund has acquitted itself reasonably well. The fund's returns of about 40 per cent are better than those of Franklin India Bluechip and Franklin India Prima Plus, and in line with that of Sundaram Growth Fund and HDFC Top 200 Fund.

All of these funds have a good five-year record of performance. Fresh investments can be considered when the fund accumulates a consistent record of good performance.

Suitability: Though the fund's name suggests a focus on large-cap stocks, the Leadership Fund includes a sizeable number of mid-cap stocks in its portfolio. About a fourth of the fund's February portfolio was invested in stocks with a market cap of less than Rs 2,000 crore.

This pegs its risk profile higher than that of a large-cap focused fund. However, given that even the mid-cap stocks that feature in the fund's portfolio are prominent companies in their industry segments, they may be resilient to a downturn in the business and may carry a lower risk profile than other mid-cap stocks.

Performance: The fund has generated an appreciation of about 40 per cent since launch, while the Nifty has appreciated by about 33 per cent. The fund's sector choices have worked out well during the recent corrective phase. Mining and metals, construction and engineering were the key sectors by end of February 2005. The fund's terms allow it considerable leeway in the selection of stocks for its portfolio. While 65 per cent of the assets are to be invested in the top two or three companies in a sector, the rest of the portfolio can come from "emerging leaders" — stocks outside this universe. This explains the sizeable mid-cap exposure.

The fund's portfolio has a representation in sectors such as sugar (Bajaj Hindusthan), ship-building (Bharti Shipyard), dairy machinery (Alfa Laval) and construction (Nagarjuna Construction).

It also features quite a few companies that appear to be in the "emerging leaders" category such as UltraTech Cement, East India Hotels, ACC and IDBI. A diversified profile and a fairly large number of stocks in the portfolio have also played a role in limiting the volatility of returns.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Mutual fund performance — Braving a bumpy market

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line