Sundaram Growth has rarely been a chart-topper, but it has delivered steady returns. Its annual rankings -- always in the top-half of the category -- bears testimony to this. What's more, in the recent turbulence, this fund has kept pace with peers and has done better then the benchmark, BSE Sensex. The fund is up 11.34% -- a shade above the category's 11.30%.
In 2001, it performed poorly – although its 14.68% loss was less than the category's loss of 19%. Not only this, it held up well in 2000 – a tough year for growth stocks. However, in the growth-led market of 1999, the fund raked in a three-digit return, although it trailed its category. The reason for success: technology and FMCG stocks. All in all, this less volatile fund -- below the category norm -- has been a middle-of-the-road performer.
Sundaram Growth has managed to weather the slowdown with great aplomb owing to its well-diversified portfolio. Its strong bias for large-caps and a low exposure to momentum players prevented it from taking a severe hit during the tech crash in 2000. Although its tech holding touched a high of 38% in February 2000, it was spread across 15 stocks, thus making it less volatile.
However, a strong bias doesn't mean that the fund manager clings on to his picks till eternity. If they fail to perform, this fund doesn't hesitate to drop them. Case in point: Ashok Leyland and Dabur India. Apart from large-caps, it has been lucky with mid-cap picks such as Karur Vysya Bank -- the first fund to spot this pick, which turned in handsome gains. Today, technology and financial services account for top one-fourth of the portfolio while index heavyweights like Hindustan Petroleum, ITC and BHEL are its top holdings.
Interestingly, the fund rarely owns more than 8% in any stock. If going easy on aggression fetched so-so returns, diversification has helped it brave rough tides.
This fund isn't a recommendation for aggressive investors. Sundaram Growth may not do wonders in a rising market, but it won't give you sleepless nights either.
This article was originally published on September 04, 2002.
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