Skip to main content

Mutual Fund Review: Sundaram Equity Multiplier

 

New investors seeking a multi-cap investment in mutual funds have other options to choose from and can ignore Sundaram Equity Multiplier

 

A multi-cap offering from Sundaram Asset Management Company, Equity Multiplier has been an average performer so far with returns at par with those of the benchmark indices. While the fund has had a good launch at the beginning of the stunning rally in January 2007, it slipped in performance after that. Its failure to rebound since then has had a cascading impact on its overall ratings till date.

PERFORMANCE:

Despite the volatility in the markets, Sundaram Equity Multiplier has had a good start in 2011. Returning over 3% since January this year, it is poised to outperform the major indices which have registered a fall of more than 5%
during this period. This short term performance, however, fails to make
up for its underperformances during the previous years.


   Equity Multiplier gained the market momentum posting a handsome 79% gain in the very first year — a fine reward for those who took the risk of investing in a new fund offering. This excitement was, however, short-lived as the impact of the global financial meltdown led to the scheme shedding more than 55% of its gains in the very next year. The savage sell-off stocks being uniform, across all equity mutual fund schemes, sectors and indices, investors would have ignored the slippage in the performance of this scheme in 2008. However, the scheme's failure to compensate for the losses during the upswing in the markets in 2009 and then again in 2010 does not seem to have gone down well with investors, as reflected in the consistent decline in its AUM.


   In 2009, for instance, Equity Multiplier returned just about 68% gains against over 88% clocked by its benchmark index — the S&P CNX 500. Its peers, on an average, returned nearly 87% then. Again in 2010, the scheme's performance was quite dismissal as it returned just about 11% against the average of 18% returns by its peers. No wonder, having made just about 42% absolute gains since its launch, Sundaram Equity Multiplier appears to have lost out in terms of investor confidence.

PORTFOLIO:

Unlike most of its peers, who are extremely bullish on the financial and energy sectors, Sundaram Equity Multiplier has placed its bets on the healthcare sector which currently accounts for more than 22% of its equity portfolio.


   A dormant sector once upon a time, healthcare has seen a good run-up since 2009. So much so that equity funds dedicated totally to the healthcare segment have shown a better performance over the past three year period. However, having seen a good run up already, it is anyone's guess as to whether the momentum will continue in the healthcare sector. If it does, then Sundaram Equity Multiplier could be a sure shot beneficiary. While the healthcare is the predominant sector for the fund, the diversification here is restricted to just about four stocks — Cadila Healthcare, Glenmark, Torrent and Biocon. Moreover, its asset under management of about 300 crore is concentrated in just about 24 stocks resulting in a high exposure per stock.

OUR VIEW:

Barring its performance in the current calendar year so far, Sundaram Equity Multiplier does not have much to back it. New investors seeking a multi-cap investment in mutual funds have other options and can ignore Equity Multiplier. However, given the turnaround in its performance over the past few months, existing investors may hold on to their investment, especially if they have invested in the scheme during late 2007– early 2008 when NAV of the scheme had peaked at 18 per unit.

 
 

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

About CRISIL IPO Grading

CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comm...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now