Sundaram Select Focus Fund: Suited best for risk takers

Sundaram Select Focus is an out-and-out Large cap fund which had consistently outperformed its Benchmark over one and three year time period. The fund's objective is to achieve capital appreciation by investing in equity and equity related instruments of select stocks. Financial advisor Arnav Pandya recommends this fund to investors who have risk taking capacity.

Nature: Equity oriented open ended

Inception: July 2002

Assets under Management: Rs 728 crore at the end of January 2012

Fund Manager: Srividhya Rajesh

Analysis:

The fund is a dedicated large cap fund and it had the highest exposure to energy at over 22 per cent of the portfolio at the end of January 2010. This was followed by IT, Metals and financial services.  The fund just had 31 stocks in its portfolio and the highest exposure was to ICICI Bank followed by Reliance Industries, Infosys, Tata Power and Tata Motors. It had a high turnover ratio of 283 per cent and it was underperforming the Nifty which is its benchmark for the one year time period but was outperforming over the three and the five year time periods.

In the next six months there was a significant change in the entire portfolio of the fund as now financial services was the top sector with a 23 per cent exposure. Auto, IT and consumer goods were some of the other sectors that had a significant exposure in the portfolio.  ICICI Bank  was the  top stock in the portfolio with nearly 7 per cent exposure followed by Infosys, Bharti  Airtel, TCS and L&T. The fund was now outperforming the benchmark over one, three as well as five year time periods.

The fund had a change of strategy and IT was the top sector holding in the fund at the end of January 2011. This was followed by financial services, consumer goods and Pharma. But what was important was that cash and cash equivalents were nearly 17 per cent of the portfolio.  Infosys was the top holding of the fund followed by TCS, ICICI Bank, ITC and Bharti Airtel. The total stocks in the portfolio were 41 and the turnover ratio was nearly 300 per cent.  The fund was an underperformer over the one and three year time periods.

The cash holding in the portfolio went down to 10 per cent over the next six months but this was still a high figure. In terms of the sectors financial services was at the top followed by energy and consumer goods. Bharti was the individual stock at the top of the holding list with an exposure of 6 per cent followed by   ITC, ICICI Bank, HDFC Bank, and Cairn India. The fund still remained an underperformer over the one and three year time periods.

The top three sectors in the portfolio of the fund remained the same in the same order of financial services, energy and consumer goods at the end of January 2012.  The impact of this was seen in the turnover ratio of the fund that went down to 200 per cent. ICICI Bank was the top holding followed by Infosys, Reliance Industries, ITC and SBI.  The fund  pulled  ahead of the benchmark over the  one and  five  year  time period but was still behind on  the three year performance  charts.

This is a fund suitable for investors who want an exposure to large cap stocks with a holding period of 3 years and more. It is better suited for those investors who can also bear a slightly higher amount of volatility in their investments.