The Hindu Business Line : Sundaram BNP Paribas CAPEX Opportunities Fund: Hold

Since inception, the fund's performance appears impressive with 70 per cent returns. Similarly, most of the infrastructure theme-based funds riding the capital goods run have delivered good returns, ahead of diversified funds.

With capital expenditure across the industry in full swing, basic industries such as power, construction and engineering have reaped the benefits. Sundaram CAPEX Opportunities has the mandate to invest a minimum of 70 per cent of the assets in the capital goods space.

Suitability: In general, thematic funds require understanding of the industry cycle and performance has to be monitored on a regular basis to take a call on investments. Since its investments are primarily in specific sectors, the risk profile of these funds is higher compared to diversified funds. Several of the infrastructure funds were floated during the bull-run and none of them have passed through a sustained bear market. Hence, these funds are typically suited for investors who have a good understanding of market cycles as well as for those expecting higher risk-based return.

Performance: Sundaram CAPEX NAV has grown by 60 per cent over the past one year and it has marginally under performed the benchmark BSE- Capital Goods index. However, one has to bear in mind that the BSE-CG Index as a benchmark is overweight on five stocks, with Larsen & Toubro as a single stock cornering 35 per cent weightage on the index. Sundaram CAPEX's assets are spread across several stocks and this helps in diversifying the risk profile. The performance of the fund is based on stock selection within the basket to outperform the broader market. The performance of the fund appears to be similar to that of peers and significantly higher than DSPML T.I.G.E.R.

Portfolio Overview: The fund has a well-diversified portfolio consisting of 62 stocks. The assets are concentrated on five sectors, cornering 84 per cent of the net assets. The fund appears to actively churn its portfolio and book profits periodically. Among the peers, this fund has higher exposure to stocks at 26 per cent with market capitalisation of less than Rs 2,500 crore. The funds from the Sundaram stable, in general have had a tendency to hold higher cash during volatile market conditions. Sundaram CAPEX, however, has been an exception to this trend.

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