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Following the Basics

J Venkatesan, co-fund manager, Sundaram Taxsaver, talks about the investment strategy adopted for his fund...


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What is the investment strategy adopted in managing Sundaram Taxsaver?
The investment strategy for this fund is similar to any diversified equity scheme. In every equity scheme that we manage, basics such as companies with strong management, strong fundamentals, long-term growth and reasonable valuation are followed. In this fund, a bottom-up strategy is adopted to pick stocks with long-term wealth creation potential in mind. The lower redemption pattern is one of the major aspects that bears upon the portfolio strategy that focuses on medium-term performance, which is also the reason for low cash allocation in this fund.

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How differently do you manage Sundaram Taxsaver compared to Sundaram Growth?
We highlight the fact that both these funds are diversified equity schemes with the same BSE 200 benchmark. The overlap ratio between the two schemes is at 46 per cent. In the case of Taxsaver, we are conscious that the stocks selected need not deliver short-term performance, but need to deliver strong performance in the medium-term, say over a 3-year period and more. So, in the short-term, we are willing to stay with underperformance compared to the benchmark, as long as the medium-term performance of the scheme is superior.

On the other hand, Sundaram Growth stays with the benchmark stocks with adequate weights so that performance is in line with the BSE 200. This fund has an overlap ratio of 38 per cent with the benchmark stocks. In comparison, Sundaram Taxsaver may not hug the benchmark index in any manner and hence an overlap ratio of just 28 per cent with the benchmark. In case of Sundaram Growth there is a higher large-cap exposure compared to the Taxsaver, which has a higher average holding period.



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