Fund of Fortnight
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
Reason for recommendation
Looking at the present market condition, it makes sense to take a calculated risk as any negative sentiment at the current juncture would lead the markets towards correction. Therefore, in that sense, Mid-Caps look like a sensible bet. However, to avoid taking any risk at the current juncture, having investments diversified across Large-Caps and mid-caps would be prudent. Therefore, it makes complete sense to invest in large and mid-cap funds. We have identified Sundaram Large & Mid-Cap fund. As this fund involved mid-cap holdings, it makes sense to have a minimum investment horizon of five years. Speaking about the fund, launched in February 2007, this fund has delivered 13.41 per cent returns since inception. Looking at its trailing returns, this fund performs well in the long term.
However, to get an idea about its performance consistency, we analysed its 5-year rolling returns. This fund has outscored the category average with average 5-year rolling returns at 16.09 per cent, while that of the category average being 9.19 per cent. Interestingly, this fund has never had a negative 5-year rolling return instance in the past 10 years, while most of the time this fund delivered returns between 10 per cent to 20 per cent. On the risk front, the fund undertakes risk in parlance with the category. Looking at its portfolio, this fund invests the majority of its assets in the financial, technology and automobile sectors. However, with investment across 73 stocks, this fund can contain concentration risk with only 30 per cent of its assets dedicated to the top 10 stocks and 43 per cent to the top 3 sectors. Speaking of individual stocks, this fund holds some quality names like ICICI Bank, Reliance, HDFC Bank, L&T, and so on. This fund is more suitable for moderate to moderately aggressive investors.
