A consistent fund

FUND PICK: Sundaram Growth

The fund has outpaced its peers in five of six calendar years of existence.

Background: Sundaram Growth Fund was launched in March 1997. The fund charges no entry load for investments up to Rs 1 lakh. However, an entry load of 2.25 per cent is applicable on investments in the range of Rs 1 lakh to Rs 2 crore.

Performance and portfolio: Consis tency is an apt word to describe Sundaram Growth. With a well-diversified large-cap portfolio, lower volatility and no single stock crossing 5 per cent allocation, the fund is an ideal choice to supplement an aggressive equity portfolio.

The fund holds a respectable long-term record - five-year annualised returns of over 15.76 per cent as on December 31, 2004. Moreover, it has outpaced its peers in five of six calendar years of existence. And 2004 is no exception - its 26.18 per cent return in the year is better than the category's 24.54 per cent return.

The fund's limited downside and upside potential was evident last year. In the not-so-favourable equity markets in the first five months of the year, the fund lost 21 per cent, which was less than what its peers lost.

And once the markets recovered in the latter half of 2004, the fund gained 35 per cent - in line with its peers. It has recently pared exposure to auto stocks and increased its allocation to metal scrips.

The fund also participated in the mid-cap PSU bank rally of 2003 and returned 112 per cent, mirroring the category's performance. When the prospects of divestment seemed uncertain, the fund started reducing its allocation to PSUs. Its exposure in FMCG, healthcare and banking sectors has also been trimmed down.

At all times, the fund has held over 40 stocks in its kitty, providing the much-needed diversification. This has also helped it limit volatility - the fund's standard deviation of 6.43 per cent lies in the bottom half of the category. As the fund manager has largely followed a buy-and-hold strategy, the fund's portfolio turnover is on the lower side. 
 

Top holdings
As on Nov 30, 2004	Value (Cr)	Net Assets (%)
Tata Tea	4.70	4.03
Tata Consultancy Services	4.59	3.93
Wipro	4.37	3.74
Tisco	4.37	3.74
ACC	4.25	3.63
Gujarat Ambuja Cements	4.19	3.59
Mahindra & Mahindra	4.16	3.56
Infosys	4.09	3.50
ITC	4.09	3.50
Reliance Industries	4.01	3.44
Hindalco	3.98	3.40
SBI	3.76	3.22
i-flex solutions	3.31	2.83
Indian Oil	3.31	2.83
ONGC	3.15	2.69
Asea Brown Boveri Power	3.13	2.67
SAIL	2.93	2.51
Cipla	2.86	2.45
Nicholas Piramal India	2.78	2.38
Tata Motors	2.76	2.36

Outlook: With returns hovering around the middle quartile of the category, we don't recommend Sundaram Growth for aggressive investors. However, the fund's stable long-term performance should help it attract cautious investors.

- Value Research