Sundaram Emerging Small Cap-Series 4 

ISIN INF903JA1DP5

Overall analysis 

3-yr rolling excess returns has given higher returns andTe ranges between 4-6% and it has crossed 10% in may 2023; but the funds’ performance in the short run has been deteriorating. The fund had given the high excess return in comparison to its peers; but has dropped to below 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 of the fund shows that the fund was going parallel with the third green median line so the fund is as good as the 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 impressive 3-year excess returns, touching 5% per annum and a significant time around the 2-4% pa, whilst lower than index volatility of 2-3% pa. However, the excess return has never came down.

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 was always above 4% and has also gone up to till 10% which means it is too much active 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 first was negative but then also went above till 4 which is good then the ideal but has also come down again in April 2023 to- 0.3 which is not ideal.

Prepared by – Shreyas Walve, August 2023