Mutual Funds

Sundaram Select Focus: Betting on oil & gas

Yoganand D | Updated on October 20, 2012

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Sundaram Select Focus is a large-cap stocks focussed fund. The fund has underperformed its benchmark index — S&P CNX Nifty — over one- , three- and five-year time frames. Its one-year return is 9.6 per cent while its benchmark has delivered 13.5 per cent.

Funds such as Quantum Long-term Equity, HDFC Top 200 and ICICI Pru Focused Bluechip Equity have done much better than Sundaram Select Focus. This large-cap fund stands in the bottom quartile of funds in its category.

Sector trends, stock moves

The fund held 30-32 stocks during the last three to five years. Now its portfolio size has increased to 48 stocks. The fund was overweight in Energy (oil & Gas) during late 2008 and early 2009; it increased its holding in this sector to as high as 31 per cent in May 2009. However, thereafter, the fund reduced its exposure. Oil & Gas sector found its place in the top five sector allocation and the fund has almost 13 per cent exposure to this sector.

Reliance Industries has been the fund’s top pick consistently over the years. Over the last one year, the stock has given a negative return of almost 5 per cent, underperforming Nifty and Sensex.

The fund increased its exposure to the Financial Services sector from 14 per cent in September 2008 to 25.7 per cent in September 2012. It consistently churned stocks in this sector and ICICI Bank and State Bank of India found place in its top ten holdings. The fund pared its portfolio holdings in Axis Bank but increased its exposure to HDFC Bank.

Information Technology sector got its allocation increased from 8.8 per cent in September 2010 to 16 per cent in September 2012. Major stock holdings in this sector are Infosys, Satyam Computer Services and Tata Consultancy Services. The pharma sector found increasing favour from November 2010 and the fund currently has 6.8 per cent holding in this sector. Glenmark Pharmaceuticals, Ranbaxy Laboratories and Pfizer are the stocks to which the fund has exposure.

The fund had earlier held exposure to real-estate sector, a heavy underperformer for the past few years, Unitech and Sobha Developers. Further, the fund significantly reduced its holdings in telecom and metals sectors. It upped its stake in ITC from 3 per cent to 4.7 per cent from September 2008 and September 2010. ITC has been a heavy outperformer in the markets over the past one year.

Published on October 20, 2012

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