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Suresh Parthasarathy

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Investors can retain their holdings in Sundaram BNP Paribas India Leadership Fund. The fund has outpaced the Nifty in four of the past five years (barring 2006-07). Since its launch in 2004, the fund has generated a compounded annual return of 41 per cent and outpaced its benchmark by 3 percentage points.

The fund’s objective is to invest in companies that are leaders and emerging leaders across sectors. The portfolio maintains a flexicap profile with a bias towards large-cap stocks, which at present account for 60 per cent of the assets.

Though the fund benchmarks itself against the Nifty, it invests quite actively outside the Nifty basket. Quite a few mid-cap stocks feature in the portfolio.

At times, the fund takes concentrated exposures to preferred sectors, with the top three sometimes accounting for over 50 per cent of the assets. A new fund manager has recently assumed charge, which too warrants a wait-and-watch approach before making any fresh commitment.

Performance: The fund has returned 13 per cent for the past year and has outpaced the Nifty by four percentage points. None of the flexicap funds managed a double-digit return in this period.

The presence of mid- and small-cap stocks in the portfolio may partially explain its negative 28 per cent return in 2008. Over this period, the Nifty and BSE-100 returned 20 per cent and 10 per cent respectively.

Portfolio overview: For a compact asset size of Rs 200 crore, the fund owns a large number of stocks. The latest portfolio features 50 stocks.

Financial services, energy and metals have been the preferred sectors over the past year. One offbeat sector preference was the 10 per cent investment in the fertiliser sector.

The fund made a cautious call on IT, cement and auto over the one-year period. The fund is being managed by Mr J. Venkatesan for the past four months.

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