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Mutual Fund Review: Sundaram S.M.I.L.E Fund

Type: Equity Diversified
Fund Manager: Anoop Bhasker, S Krishnakumar
Launch Date: 21-Jan-2005
 
Sundaram SMILE Fund has been in operations for more than a year and a half now and has grown at a CAGR of 38.16%, which is decent considering the recent upheavals in the market. The primary investment objective of the scheme is to achieve capital appreciation by investing mainly in small and midcap stocks in a diversified manner. The fund house further defines 'small and midcap stocks' as any stock whose market capitalisation is equal or lower than the market capitalisation of the largest market capitalisation stock in CNX Midcap 200 index.

The investment mandate of the scheme states that the asset allocation of the scheme will have 65-100% allocated to small and midcap stocks, other equities 0-35%, Derivatives and IPOs 0-25% and Call/Cash and money market instruments will have 0-15% allocation. The scheme has allocated 92.42% to equities according to the latest disclosed portfolio, and Cash & Equivalent investment form 7.58% of the net assets.
 
Sundaram Smile fund has an asset base of Rs 217.09 crores as on Aug 06, which has seen some erosion in the recent months.

The scheme has invested in as many as 75 scrips and top 5 holdings account for 18.77% of the portfolio and top 10 scrips constitute 31.40% of the portfolio.

Diversified sector is the most favoured sector with an overall allocation of 14.29%, followed by Auto & Auto ancilliaries with 9.34% allocation and Cement sector with 7.65% allocation.
 
 
 
Reliance Industries Ltd has the highest weightage in this month's portfolio and other top holdings in the portfolio are JP Associates, Chettinad Cement Corporation, ACC and L&T Ltd. Fourteen new stocks were added in this months portfolio and some of the new entrants are Banking stocks like Bank of India, SBI and PNB and Oil& Gas stocks like Indian Oil, Indraprastha Gas, BPCL and HPCL, recently listed Tech Mahindra also find a place in the portfolio.

The scheme exited from stocks like Balrampur Chini, Tata Tea, Thirumalai Chemicals ltd and Mcnally Bharat Engineering Corporation among others.
 
Sundaram Smile fund has failed to outperform its benchmark index and its peers in the different time periods. Although most other equity schemes from the same fund house has been doing pretty well, this scheme has failed to live upto expectations. The small cap dominated portfolio has not enhanced the scheme's returns and presence of large number of stocks in the portfolio has lead to over diversification. All is not lost though, as it is still early days for the scheme and looking at the record of some of the other midcap and small cap oriented schemes from the same fund house, and it will be worthwhile to wait and watch for a little while longer. As of now, the scheme faces an uphill task and certainly has a lot of catching up to do to climb the rankings.
 

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