The Hindu Business Line : Sundaram BNP Paribas Select Focus: Hold

Unitholders can retain their investments in Sundaram BNP Paribas Select Focus Fund. Its objective is to invest only in a select number of stocks, and its performance is entirely dependent on the stock selection.

In the entire Sundaram Fund umbrella, only Select Focus follows a strategy of investing in a relatively narrow basket of stocks. The strategy has paid off, with the fund registering a return of 45 per cent for a period of three years and outpacing its benchmark Nifty by 9 percentage points.

The silver lining is that its asset size is far smaller than such peers as Franklin India Bluechip and HDFC Top 200. This might offer greater flexibility in investment style.

Performance: The one-year return of Select Focus, at 58 per cent, is better than the diversified large-cap funds such as Franklin India Bluechip and HDFC Top 200. It outpaced the benchmark Nifty by 5 percentage points.

Despite its small asset size, it has preferred to hold a higher cash position in its portfolio compared to its peers. The strategy has not helped it during the recent pull-back in the market. Notwithstanding its higher exposure to large-cap stocks, it managed to return 4.5 per cent over the past six months and it has trailed its peers by 4.5 percentage points.

Portfolio profile: The fund has 32 stocks in its portfolio, the top ten accounting for 52 per cent of the net assets.

The portfolio mimics the Nifty basket greatly and about 10 per cent is invested in stocks with a market cap of less than Rs 4,000 crore over a long period.

Its assets are spread among 11 sectors, with the top three — engineering, software and energy — accounting for 38 per cent of the portfolio. The exposure to any single stock has been restricted to 8 per cent over the past few years.

The fund appears to book profits periodically, without effecting much of a change in its core portfolio over the past year.

Reliance Industries, Infosys Technologies and Tata Motors are some of the prominent stocks in the latest portfolio.

Fund facts: Select Focus was launched in July 2002 and is managed by Ms Srividhya Rajesh. The minimum investment is Rs 5,000 and in multiples of Rs 500. The entry load is 2.25 per cent.

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