Sundaram Multi Cap Fund – Direct Plan – Growth


Overall analysis

1-yr rolling excess returns of the fund is negative to the index. Overall, this fund has moderate TE. The IR of this fund is in negative figures which is un-impressive. The fund gave an average return in comparison to its peers as it is above median. Fund has a good start with a good return but as of now it is underperforming.

Performance analysis 

Rolling returns – 3 years rolling excess returns against 7 years

Snail trail – 3 years rolling excess risk/return over 7 years 

Tracking error – 1 year rolling tracking error 

Information ratio – 1 year rolling information ratio

Rolling returns in quartiles

The rolling return chart shows excess 1Y-year rolling return 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 fund’s performance (blue) line shows that the fund has outperformed the index minimally, touching the highest 3 year rolling excess returns of 3.4%. This fund’s indicator & maximum green line is identical, which concludes that the fund has been in a great performance with its peers in past stages (from December 2017 to July 2019). During June this fund gave returns somewhere between median line and upper quartile. 

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 1-year annualized returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

The fund had a start of a 3 years rolling excess risk/return with a positive risk of 0.5% & return of 1.08% against its benchmark index, The fund faced the negative returns in its recent stages most of the time. In the lower left quadrant of the chart- we can see that the fund hits a negative side low of -2.8% with the total risk of -1.3% against the benchmark index.

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 1-3% range considered to be low TE, 3-6% range considered to be moderately active and anything higher than 6% is high TE. Funds with TE of less than 2% can be considered to be closet indexers.

Tracking error chart shows that the fund’s overall TE has its most of the footprints between 3%-4% & had a sharp rise in the month of June 2020; hitting the high of 6.6%, In the past month of June 2023 the TE stood at 3%. Overall, the fund was in both phases of moderately & highly active- as of now it is moderately 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. 

In this chart the IR indicator has spent its time in the range bound of -1 & 2.23, it fell to the lowest mark of -4.5 during March 2021, thus, the fund underperformed the index from 1 year rolling information ratio’s point of view. The fund’s IR ends with a negative figure of -1.4 in the recent month of June 2023 which means the fund is least active and is giving no/less risk adjusted returns.

Portfolio analysis

Stock style chart

Morningstar’s stock style chart shows the ‘style’ of the stocks in the portfolio in terms of size and value/growth style. The centroid shows the weighted average while the zone circle shows how varied the stock styles are.

The centroid indicator of this fund lies at the top right corner of the stock style chart- which indicates that; the portfolio of this fund has weightage over large cap- growth category stocks, while its peers also have similar growth securities in its portfolio. Ownership zone indicator ring says that; the fund has picks around mid & large cap with blended & Growth category stocks, this fund doesn’t have involvement in small cap’s any kind of securities. While other multi-cap funds indicated by the yellow (ring)- indicates that its category has channelised its funds only into mid, large- growth & blended types of stocks.

Factor profile chart

Morningstar’s factor profile shows the historical style analysis of the stocks in the portfolio in terms of size, value/growth style and other key factors. The blue circle shows the fund relative to the black dot for the category average.

Above factor profile chart demonstrates that yield/returns is as low as its category average & has declined slightly- by 5yr historical range indicator point of view, while volatility & liquidity is low & according to the 5 years historical range- it has been decreased till date and stands out with its category average, at times volatility of the portfolio stocks used to be at peak levels also. Momentum of the securities held & traded is high & has outperformed its category average. Overall quality of the stock picks is average and slightly better than its peers. Therefore the portfolio is stuffed by growth stocks. Size indicator states; it is small & low as compared to its category.

Prepared by – Hemanth Reddy, August 2023

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