When bears take charge of the market, Sundaram Growth can be counted upon to stem losses. It believes that protection of returns is as important as their generation. A well-diversified large-cap portfolio, consistency of returns, lower volatility and no single pick having more than 5 per cent of total assets, makes it an ideal choice to supplement an aggressive equity portfolio.
Although the fund has hardly been a chart topper, it has a respectable long term record. It has rarely outperformed its benchmark or topped its category during bull phases and has rarely fallen more than its benchmark or its peers when bears took charge.
In the bull run of 1999, the fund did participate in the tech, FMCG and pharma stocks rally, but to a limited extent. That year, its returns were 108 per cent against the category average of 133 per cent. A lower exposure in momentum stocks, judicious diversification and timely exits saved this fund in 2000, as it escaped with a negative 21 per cent returns when the average equity fund fell 26 per cent and was among second quartile performers in that bear phase.
Again in 2001, the fund survived the bear spell against the steep losses in most of the equity funds and fell just 15 per cent compared to 19 per cent fall for the category. Old economy and cyclical stocks helped the fund stem its losses. Also, the fund lost just 3 per cent in the bear phase of December 2002 to April 2003, when the average equity fund was down 6 per cent.
The fund also participated in the mid-cap PSU bank rally of 2003 and returned 112 per cent, mirroring the category performance. When the prospects of divestment seemed uncertain, the fund started reducing its allocation to PSUs in recent months. Its exposure in FMCG, healthcare and banking sectors has also been trimmed down substantially. In the volatile phase of 2004, the fund held its ground bravely and has fallen 10 per cent so far this year as against the average category fall of 14 per cent.
All in all, its lower volatility coupled with consistent performance makes it an ideal choice to supplement an aggressive equity portfolio. It's a compelling option for an investor looking for safety over spice and having a long-term view.