Sundaram Emerging Small Cap-Series 2 

ISIN INF903JA1CR3

Overall analysis 

3-yr rolling excess returns has given high returns compared to benchmark and TE ranges above 6% and it has touched 8.5% in November 2020; but the funds’ performance in the short run has also been good. The fund has given a higher excess return in comparison to its peers; but has been going up 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.

Looking at the rolling return chart of the fund it was below the third green median line till September 2022 then was parallel with the median line so it is as good as 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 5% per annum and a significant time around the -2-2% pa, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -1.44% in 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 shows that it has always been above 4.50% which is called that the fund is too active.

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 funds information ratio was negative from May 2019-September 2021 but has gone above the 1 from June 2021 and now  in March 2023 has gone 2.3 which is better than ideal.

Prepared by – Shreyas Walve, August 2023