The Hindu Business Line : Sundaram Select Focus: Sell

UNITHOLDERS of Sundaram Select Focus can exit as there are comparable funds with a better track record. Launched in July 2002, the fund aimed at focusing on only a select number of stocks. Typically, this would mean that the top ten stocks account for about 60-70 per cent of the assets. Such a strategy provides scope for gains if concentrated bets are made on the right stocks.

The portfolio is akin to that of several other diversified funds. The top ten stocks account for only about 50 per cent of the total assets, more or less the same as other funds.

HDFC Equity, in contrast, follows a more focused strategy with more than 60 per cent of the assets invested in the top ten stocks; it also has a better long-term track record.

Select Focus does tend to have a more concentrated portfolio than other funds in Sundaram Mutual's fold. Sundaram Midcap and Sundaram Growth have a greater number of stocks in their portfolio, with holdings in any single stock capped at 5 per cent.

Investors with a fancy for a focussed approach to investing may consider switching to HDFC Equity. Others, too, may consider diverting their funds to diversified equity funds that have a superior performance track record.

Performance: The fund did reasonably well in 2002 and 2003, though its showing over the past year has been rather uninspiring, with a return of about 47 per cent, just about keeping pace with the benchmark indices.

The fund has been sitting on a significant cash pile the past two months, which could partly explain the drag in performance. As of September 30, it had 15 per cent of its assets in cash, a reflection of its cautious view on markets.

The fund's annualised return over a three-year period is about 50 per cent, which lags that of HDFC Equity by a significant margin.

Portfolio overview: The portfolio consists of about 30 stocks, which is not small, considering the nature of the fund and the relatively small asset base of Rs 60 crore.

Engineering, financial services and oil are the top sectors of the fund and account for less than 40 per cent of the assets.

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