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A Disciplined Family

Sundaram Mutual Fund works hard to keep your money safe. However, not many investors seem to have realised this so far

Surely, Sundaram Mutual Fund deserves more attention than it gets. Even though a 73.99 per cent growth in assets in the last one year looks good, the total assets under management (AUM) of Rs 3,273 crore as on March 31, 2006 makes it one of the smaller fund houses in the country. The AUM has remained low even as the fund house has managed funds in all categories extremely well for over nine years now. Perhaps, the AMC needs to add more distribution muscle to reach a larger audience.

The last two years was a good opportunity for the fund house to boast of its equity funds' performance and cash-in on the NFO mania. The fund attempted to seize the opportunity by launching two equity funds-Sundaram S.M.I.L.E. in January and Sundaram Capex Opportunities in September last year. Both the funds had reasonable success-while S.M.I.L.E. mopped up Rs 356 crore, Capex collected Rs 630 crore. However, they have failed to attract any significant fresh investments since then.

This year, the fund house has launched Sundaram Rural India Fund whose new fund offer period is currently on. Another fund which the fund house may launch in the near future would be a close-ended fund that would focus on small-cap stocks, titled Sundaram Select Smallcap.

Product Basket & Performance
Sundaram Mutual Fund has a wide array of funds. On the equity side, the fund offers six funds with different flavours. While Sundaram Growth promises stability with a large-caps oriented portfolio, those interested in flashy returns with some more risk by betting on mid- and small-cap stocks can opt for Sundaram Select Midcap or Sundaram SMILE. Sundaram Select Focus is an aggressive fund with a twist-it maintains a concentrated portfolio to benefit from rally in select stocks. The fund house offers yet another interesting fund in Sundaram India Leadership, which has a mandate to invest in stocks of companies which are leaders in their respective sectors/sub-sectors or amongst top 2/3 companies in any sector/sub-sectors in terms of net revenue or total income. The fund believes such companies would suffer less in falling markets and thus has positioned the fund as a defensive strategy in booming markets like the one we have today.

Though all the equity funds look different, they have one important thing in common-all are designed to keep your money safe. Except for Sundaram Select Focus, all the funds maintain a well-diversified portfolio with individual stocks rarely getting more than 5 per cent allocation. This ensures a lower downside risk for them. As far as performance is concerned, the AMC's funds can be compared with the best in the business. While Sundaram Growth's consistency and stability make it one of the finest choices eligible to form the core of a portfolio, the fund house has a return powerhouse in Sundaram Select Midcap. All other funds too have reasonable performance record but they are still new. The fund house has yet another winner in Sundaram Taxsaver. The fund has one of the most consistent performance track record.

Move on to the hybrid funds' side and the AMC offers a good balance fund in Sundaram Balanced. While it earns consistent returns, it's real strength lies in the way it protects those returns. In the recent times, though, the fund has started flirting with mid- and small-cap stocks in a big way.

On the debt side, the AMC's short-term funds are one of the least costly funds. The expense ratio of Sundaram Money (0.61) and Sundaram Select Short-term (0.64) is on the lower side in the category, thus distributing most of the gains back to the investors. The AMC's core bond fund Sundaram Bond Saver's performance has dipped sharply and isn't worth a look at the moment.

The Way Ahead
Notwithstanding the slow growth in its assets, Sundaram Mutual Fund does its job of earning and protecting investors' money extremely well. Most of its funds command three and four star ratings from Value Research. In the last over nine years of existence, the fund house has proved that it has the potential to beat the best in the business. Though the funds are small, they have the spark. We believe that Sundaram Mutual Fund deserves to manage much more than what it does at the moment.