I have been investing in Sundaram Select Focus through monthly SIPs of Rs 1,000 since February 2010 when the NAV was Rs 12.01. I made some additional purchases after that and my average acquisition cost in this scheme is Rs 9.60. However, the NAV of this fund is currently Rs 8.53. Should I continue to invest in this fund till my investment reaches break even or should I stop my SIP.
- V. Sundaranarayanan
Sundaram Select Focus is a 10-year-old 2-star rated large-cap fund which invests in very few select stocks, with a maximum of 50 companies in its portfolio and each having a market capitalisation of not less than Rs 500 crore. In the first five years after its launch, this fund performed exceptionally well being the top performer in the category in 2006 and 2007. However, since 2008, the fund's performance is only deteriorating. It is posting poor returns compared with both the category average and the benchmark. Its current portfolio is defensive with overweight positions in FMCG and healthcare sectors compared with the Sensex. The future prospect of the fund does not look favourable and you would be better exiting this fund to cut losses than hold to the investments for a break-even. The opportunity lost in waiting for a fund to turnaround is not worth it and you should consider investing in a broader equity diversified fund scheme instead.