Sundaram Small cap Fund-Direct Plan-Growth (Adjusted NAV)

ISIN INF

Overall analysis 

3-yr rolling excess returns has given high returns against benchmark and TE ranges between 4-6% but it decreased to 0 in April 2023. The performance in the short run has been good. The fund had given a high excess return in comparison to its peers; but has been neutral in 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.

At the start in June 2016 it was above the third green median line but has come down in September 2017 has not gone up so the fund is not 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 impressive 3-year excess returns, touching 10% per annum and a significant time around the 0-2% pa, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -4% August 2018.

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 was in between 4-7% which is called as too much active but in September 2022 it has come down to 0% which means it is not 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. 

Information ratio of the fund was negative at start but has gone to 1.5 in September 2019 Which is ideal and now in June 2023 it’s around 0.5 which is not ideal.

Prepared by – Shreyas Walve, August 2023