Sundaram Select Midcap :: Business Line

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In the last couple of years, the S&P BSE Mid-cap Index has witnessed quite a bit of volatility, appreciating in 2012 and declining since the beginning of this year.

Due to this volatility, Sundaram Select Midcap has experienced redemption pressures, with its average assets under management (AUM) dwindling by 22 per cent currently compared to the same time last year.

However, the fund has outperformed its benchmark, S&P BSE Mid-Cap Index consistently.

It has delivered a negative return of 2.7 per cent (BSE mid-cap — negative 11.3 per cent) and 1.8 per cent (BSE mid-cap — negative 11 per cent) over one and three years.

It has gained 18.7 per cent, compounded annually over the last five years, placing it in the top quartile of mid-cap funds.

The fund’s NAV has increased by 5 per cent in the last one year. It currently has 56 stocks in the portfolio spread across 23 sectors.

SECTOR MOVES

The fund has positioned itself as a pure mid-cap fund. Its objective is to achieve capital appreciation by taking active sector, stock and cash calls that fall in line with the mid-cap mandate.

Currently, the fund’s top three sector holdings are financial services, automobile and consumer goods.

These three sectors constitute 44.9 per cent of the portfolio. Defensive sectors such as pharma and IT which outperformed the broader markets in the last two year have 11.2 per cent and 8.4 per cent allocations now.

It has upped its allocation in the industrial manufacturing sector from 5.4 per cent in August 2012 to 7.5 per cent. From about 11 per cent a year ago, it has decreased its exposure to the fertilisers and chemicals sector to 2.6 per cent now.

Holdings in the construction sector was also trimmed to 4.5 per cent. On the other hand, oil/gas and textiles found a berth in the fund’s portfolio in recent times.

STOCK MOVES

The fund is overweight on IPCA Labs and has consistently upped its allocation to it in the past two years. Interestingly, the stock has done well, gaining 62 per cent in the last one year and is hovering at a life-time high.

Fag Bearings India, Bosch and Indraprastha Gas remain the fund’s top 10 preferred stocks, but these have stayed range-bound over the last one year.

Other auto ancillaries such as Amara Raja Batteries and WABCO India too continue to be part of top preferred stocks in its portfolio. Amidst the slowdown in the auto industry, these stocks have been good performers.

In the IT sector, it exited holdings in MphasiS and Idea Cellular in the last two years. At the same time, the fund has gained from the inclusion of Tech Mahindra, which has been outperforming in the IT space, zooming up 58 per cent in the past one year.

Polaris Financial Technology and Mindtree also found place in the porfolio but with less then 1 per cent holdings.

Holdings KPIT Technologies and Hexaware Technologies were slightly increased. The fund has been managed by S. Krishnakumar since November 2012.