Sundaram Select Micro cap Series XVII-Direct Plan


Overall analysis 

3-yr rolling excess returns has given high returns against the benchmark and TE ranges between 4-6% which indicates the fund is active but the funds’ performance in the short run has been getting better. The fund had given a higher excess return in comparison to its peers.

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 shows that From November 2020 to March 2022 fund was below the third green median line but after March 2022 it has gone above the third green median line so 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 4.64% per annum and a significant time around the negative side of the chart, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -3.95% in May 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.

At looking at the tracking error we can see at the start of the fund is was around 7% in November 2018 so it was active at that time and always been in the bracket of 2-4% which means it is barely active but has also gone up to 8% in July 2022 which means it was too much 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 information ratio of the fund was negative from November 2018 to May 2021 but has gone up to 4.5 in July 2021 which means it was good but has come down to 0.38 in July 2022 which is not ideal.

Prepared by – Dhruvi Shah, August 2023


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