The Hindu Business Line : Sundaram Growth: Hold

INVESTORS can retain their holdings in Sundaram Growth Fund. The fund has outperformed the benchmark indices over the past year, although not by a substantial margin. Given the fund's orientation towards large-cap stocks, however, the performance has been good and compares well with that of other large-cap funds such as Franklin Bluechip and HSBC Equity.

The fund follows a conservative investment strategy, with exposures to stocks capped at 5 per cent. This level of diversification may strain the fund's performance in bull markets — the fund's returns in the past have been more modest than its peers. But the consistency in performance, a strategy of booking profits regularly and a large-cap bias make it well-suited for the conservative investor.

Performance: Over the past five years, Sundaram Growth has consistently beaten its benchmark index, the BSE-200. But the fund has invariably figured in the middle of the performance charts.

It delivered a return of 55 per cent over the past year, beating the Sensex by five percentage points. Unlike diversified funds that have stepped up exposures to mid-cap stocks to boost performance, however, the fund has resolutely stuck to large-cap stocks.

More than 90 per cent of its assets are invested in stocks with a market capitalisation of Rs 3,000 crore and above. This has been the case with funds such as Bluechip and HSBC Equity as well, which have also delivered returns that are in line with the market.

Portfolio overview: The portfolio comprises about 40 stocks, which is a large number for a Rs 115-crore fund. But the greater depth that the stock market has acquired may warrant holding as many stocks. The top ten stocks account for about 40 per cent of the total assets.

Prominent stocks in its portfolio include Tata Tea, ITC, ABB, Siemens and BHEL, which have delivered handsome returns over the past year. IVRCL, Aurobindo Pharma, Shoppers' Stop and Yes Bank are a few mid-caps that figure in the fund's holdings.

Engineering, technology and oil stocks are among the top holdings.

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