Sundaram Taxsaver has proved that it can manage an adventurous life with ease. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
This fund chose to be adventurous last year and is doing well. However, with the markets entering an uncertain territory, the fund manager will need to be agile in case the party poops. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In February 2004, Sundaram Taxsaver was undergoing an image makeover in favour of mid and small-caps. Looking at its conservative approach in the past, we were quite concerned about the fund's future prospects. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
However, in a year, the fund has proved that it can also manage an adventurous life with ease - the fund surged 43.78 per cent in 2004 to reserve a place in the top quartile of the category. As on November 8, 2005, it's up 33.24 per cent and is ahead of the 33.02 per cent rise of its peer group average. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earlier, Sundaram Taxsaver was a conservative player and a middle-of-the-road performer. It would neither zoom exceptionally in rising markets, nor tank in bad times. Its conservative approach helped the fund manage the difficult phases of 2000 and 2001 quite comfortably - the fund lost less than its peer group average. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In the next two years, when equity markets recovered, its cautious approach resulted in the fund being an average performer. But then that's what the fund aimed for. However, things changed after 2003. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The fund changed its tack in December 2003 as it increased its exposure to mid- and small caps considerably. Since then, it's maintaining an average 66 per cent allocation to them.
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This fund reaped the benefits of mid and small-caps in the booming market of 2004. It would be interesting to see how the fund manages the risks associated with smaller companies in a bearish market. At present, the fund is one of the most volatile funds in the category. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
But with no single stock crossing 4 per cent of the portfolio, diversification would take care of the excessive volatility. Being a tax-planning fund, Sundaram Taxsaver has time on its side. The fund manager will need to be agile in case the mid-cap party poops.
- Value Research
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