Sundaram Emerging Small Cap-Series 1-Direct Plan

ISIN INF903JA1CJ0

Overall analysis 

3-yr rolling excess returns has given high returns against the benchmark and TE ranges between 4-6% ; but the funds’ performance in the short run has also been good. The fund has given the high excess return in comparison to its peers; but has been neutral to the first quartile over the past 1 year.

Performance analysis 

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The rolling return shows that its fund was below the third green median line from August 2021- July 2022 but then went above the third green line which means it is better than median performance.

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

This fund has shown good 3-year excess returns, touching 4% per annum and a significant time around the -1-1% pa, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -2.21% June 2021.

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

The tracking error of the fund has always been above 4.50% which means it has been too much active that means it is not that good for the fund.

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

The information ratio of the fund was less than 1 in August 2019 and then went negative to -3.5 in February 2021 and again above the 2 in December 2022 which is above the ideal.

Prepared by –  Shreyas Walve, August 2023