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A Steady Performer

Though Sundaram Growth's returns do not skyrocket, its consistency makes it an attractive choice for those seeking steady growth.

Sundaram Growth has rarely been a chart-topper, but it has delivered steady returns. The fund has been highly focused on diversification and appeals to the conservative investor. The fund has provided 9.37 per cent return in the last five years compared to its benchmark S&P CNX Nifty's returns of a negative 1.65 per cent. Its returns since launch stand at 8.52 per cent. Even its one-year return of 26.18 per cent is substantially higher than the benchmark return of 7.27 per cent.

The fund has been predominantly sticking to large-cap stocks in leading sectors of the market and the economy with periodic switches based on relative performance. It also invests in a few mid-cap ideas to bring in value addition. At the cost of being a middle-of-the-road performer, the fund has managed to control volatility.

Sundaram Growth has managed to weather the slowdown with great aplomb owing to its well-diversified portfolio with a slight tilt towards technology and fast moving consumer goods in the past. Its strong bias for large-caps and a low exposure to momentum plays prevented it from taking a severe hit during the tech crash in 2000. Although its tech holding touched a high of 38 per cent in February 2000, it was spread across 15 stocks, thus making it less volatile.

However, a strong bias does not mean that the fund manager clings on to his picks till eternity. If the stocks fail to perform, this fund does not hesitate to drop them as it has done with ACC and Wipro recently. Apart from large-caps, it has been lucky with mid-cap picks such as Karur Vysya Bank—the first fund to spot this rewarding pick. Today, technology and financial services account for the top one-fourth of the portfolio while index heavyweights like Hindustan Petroleum, ITC and BHEL are among its top holdings.

Interestingly, the fund limits its position in a stock and avoids owning more than 8 per cent of its assets in any stock. If going easy on aggression fetched average returns, diversification has helped it brave rough tides. Sundaram growth is a good choice for a steady take on growth. It may not do wonders in a rising market, but it won't give you sleepless nights either.