Sundaram Small cap Fund-Direct Plan-Growth 


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 not been that good. The fund had given higher returns in comparison to its peers; but has gained 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.

Looking 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 is 4-8% which shows that the fund was active at times but now in June 2023 it has come down to 4.35% which is called barely 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 shows that the fund had up and down track in September 2013 it had an information ratio of 1.53 which is ideal and now in June 2023 it has an information ratio of 0.5 which is not ideal.

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 stock style chart shows that the fund style is typically a large-mid and few stocks in a small cap growth fund.

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.

The factor profile chart shows that the fund yield is low, momentum is high compared to 5 years historical range, quality is moderately high, volatility and liquidity is high compared to category average and 5 years historical range..

Prepared by – Shreyas Walve, August 2023


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