Mutual Funds

Sundaram Large and Mid Cap: Consistent returns across market conditions - Buy

Parvatha Vardhini C | Updated on January 06, 2019 Published on January 06, 2019

The fund has to invest at least 35% of its portfolio each in large- and mid-caps

Sundaram Large and Mid Cap fund is a good choice for investors who have an appetite for medium risks. Earlier called Sundaram Equity Multiplier, this fund was renamed following SEBI’s new classification norms. Large- and mid-cap funds have a mandate to invest at least 35 per cent of their portfolio in large-cap stocks and another 35 per cent in mid-cap stocks. This fund has been a top-quartile performer in the large- and mid-cap category across one-, three- and five-year time-frames.

With the markets being choppy over the past year, many funds have not been able to hold their head above water. Their NAVs have dropped sharper than their benchmarks. Since mid- and small-cap stocks fared worse than large-caps, funds which invest heavily in them have taken it on the chin.

However, Sundaram Large and Mid Cap has managed to meet the benchmark’s (Nifty 200 TRI) returns in the last one year. The fund is the top performer in the category in this time period.


After holding about 40 per cent in mid- and small-cap stocks to benefit from the rally in 2017, the fund brought down the holdings in the space to about 30 per cent once the tide turned in early 2018. However, the stakes were once again upped in the segment to over 35 per cent to meet the category criteria.

However, the fund has balanced out the high allocation to mid-caps by making conservative choices in its sector and asset allocation in this period.

The fund has more than doubled its holdings in the defensive consumer non-durables space since January 2018. Its equity holdings also stand predominantly at 90-93 per cent, with the remaining in debt. Moreover, the fund also usually uses derivatives to hedge some of its stock positions.

The scheme has proved its mettle over longer tenures of three and five years, too, bettering the benchmark’s returns by 1-3 percentage points in this period. It has been able to match the benchmark returns across market conditions in most years since the beginning of this decade — be it the fall of 2011, the 2014 and 2017 rallies, or the volatile markets of 2015 and 2016. In the past five years, the fund has boasted of an impressive three-year rolling return of 98 per cent and a one-year rolling return of 79 per cent, showing that it is a consistent outperformer.


The scheme usually holds a reasonably compact portfolio of 30-40 stocks. But that doesn’t mean it takes concentrated exposures. The fund’s exposure to its top holding is usually 4-5 per cent. Banking/finance and consumer non-durables are its top sectors.

As bettering global prospects and the depreciation of the rupee aided the IT sector, it was swift to return to software stocks after cutting it down in the initial part of 2018.

In it’s portfolio, the fund holds quality companies such as Cummins, Mphasis, P&G and Voltas in the mid-cap space.

It is noteworthy that S Krishna Kumar has been the fund manager since December 2017.

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