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Talent Spotting

With top quartile performance in the last two years, this fund has emerged as a compelling option among the mid-cap funds. Its diversification has led it to spot several multi baggers

Launched in July 2002, this one is a relatively new entrant in our picks. Timing was totally in its favour.

While in the initial few months, there was nothing to impress its investors with, once the tide turned in favour of mid-caps in 2003, this fund began to shine. It ended 2003 as the third best equity fund with returns of 157.73 per cent. In next two years, it generated top quartile returns with a ranking of 12. As a result, its popularity has grown tremendously among the investors and the assets have grown exponentially over the last few months. From less than Rs 500 crore at the start of the year, they more than doubled in August.

The fund has always believed in the virtues of diversification. However in the recent times, it has turned into an obsession - the fund spread its portfolio over 70 to 80 stocks through 2005. The last portfolio revealed around 100 stocks. Diversification is apt for a mid-cap fund since mid-caps are basically illiquid stocks. However, if the fund does hit upon a few multi-baggers the effect will not be felt in the rest of the portfolio since the holding would be minimal.

The fund has displayed an ability to think against the herd. For instance, while sectors like technology and financial services are dominating the portfolios of majority of its peers, Sundaram BNP Select Midcap does not give importance to them. They have figured among the least preferred sectors of the fund. On the contrary, the fund has shown interest in sectors like chemicals and FMCG. The fund manager has displayed skills to identify winners. For example, it was the first fund to spot the opportunity in IVRCL Infrastructures & Projects at the start of 2004.

The fund doesn't believe in buy-and-hold strategy much, as stocks keeps on coming and going out frequently. However, few stocks that the fund has held for the long-term have been multi-baggers.