There are generally two kinds of approach to mutual fund investing – aggressive and defensive. While the end goal of both these approaches is to make wealth and achieve objectives, the difference arises on certain parameters such as risk tolerance and investment tenure. In an aggressive investment, the risk tends to be a little higher than what is there in the defensive plan. Also, aggressive investment asks for longer time period (in most cases) in comparison to the defensive plans.

This article contains the main highlights about Sundaram Small Cap Fund, which includes details about past performance, portfolio construction, fund management, and the fund suitability.

Sundaram Small Cap Fund is one of the options that you could choose to make an aggrieve investment plan directed towards long-term capital appreciation. It is mainly for aggressive investors, however, it can also be chosen by others for the sake of diversification in the portfolio.

The Preface of Sundaram Small Cap Fund

Sundaram Small Cap Fund – Regular Plan (G), previously known by the name Sundaram S.M.I.L.E. Fund, is an equity-oriented small cap fund which was launched by Sundaram Mutual Fund in India in the year 2005. The fund’s objective is to create a comprehensive portfolio consisting mainly of high quality small cap stocks, geared towards long-term wealth building and making good returns. The fund competes against S&P BSE Small Cap TRI (its benchmark), and follows an aggressive style of investing.

Over the course of its operation in the Indian market, Sundaram Small Cap Fund G has created a strong presence for itself. Today, it boasts a large customer base who are mainly high risk takers looking for faster capital appreciation and goal achievement. As of 30th April 2019, the fund was observed to own an asset base that amounted ₹1,153 crore. This is a decent wealth for a small cap fund which is not so old in the market, and clues that the fund has good growth prospects in the future.

Understanding the Fund Management

The fund management plays a key role in the success or failure of the fund. In order for the fund to perform well and consistently, the portfolio shall be crafted with precision and long-term vision. Sundaram Small Cap Fund (Growth) is blessed with an efficient fund management team that ensures on every step that the fund is aligned with the market and is producing the best results possible. The fund manager, S. Krishna Kumar, is a highly qualified and experienced individual who holds a B.Tech degree from the prestigious National Institute of Technology, Trichy, and an MBA from LIBA, Chennai. He has over 10 years of experience in fund management, and has worked for various big fund management and stock broking firms prior to joining Sundaram Mutual Fund.

Analysing the Portfolio Construction

The portfolio of Sundaram Small Cap Fund is occupied by equity and related instruments, with a small space reserved for cash and cash equivalents. Though overweight on small cap stocks, the fund also has a small exposure to midcap stocks and this arrangement is revised on the basis of the prevalent market mood.

There are a total of 52 stocks in the portfolio. More than 35% of the assets of the fund are allocated in the top 10 stocks, whereas approximately 20% assets are placed in the next top 5 stocks. Further, more than 50% of the assets are placed in top 3 performing sectors in the economy namely Construction (25.19%), Engineering (15.81%), and Services (9.94%). As a result of this diversification, the portfolio is managed quite well and sustains less injury from market volatility. Also, the P/E ratio is quite modest standing at 21.70 times, which means that there is a good balance between the price of the stocks and the returns of the fund.

Scanning the Past Performance

Sundaram Small Cap Fund has given applauding results in the last five years. With 13.08% returns the fund has surpassed the benchmark (11.63%), however, staying slightly behind the category average yield. Also, it has churned returns worth 16.10% since inception, which is a good yield in the realm of small cap investing. Also, the growth graph depicts a pleasant picture where the fund has shown signs of positive movements.

So, if you like aggressive investing and desire to build good wealth, then you must pin your assets on Sundaram Small Cap Fund (G). Go for an SIP plan for making the overall process more affordable and easier.

This article contains the main highlights about Sundaram Small Cap Fund, which includes details about past performance, portfolio construction, fund management, and the fund suitability.

Author's Bio: 

Dishika is a copywriter and voice over artist. She now devotes most of her time writing articles on mutual funds and other trending topics on finance for the online investment portal, MySIPonline.