Sundaram Select Midcap is among the top 10 small and midcap equity mutual funds in terms of wealth creation over the last 10 years. If you had invested Rs 1 Lakh in Sundaram Select Midcap Fund 10 years back, your investment would have grown to around Rs 4 Lakhs by now (November 17, 2017). The fund was launched in July 2002 and has Rs 6,000 Crores of AUM with an expense ratio of 2.23%. The fund is managed by industry veteran S. Krishna Kumar, who is also the Chief Investment Officer of Sundaram Mutual Funds. It has given nearly 30% annualized returns since inception, one of the biggest wealth creators among mutual funds in India. The fund is rated highly by mutual fund rating agencies like Morningstar.
The fund has beaten the small and midcap mutual fund category, in terms of trailing returns over different time-scales (please see the chart below).
Source: Bridge Investments Research
The chart below shows the annual returns of the fund versus the small and midcap funds category over the last 5 years. You can see that Sundaram Select Midcap fund outperformed the category in most years over the last 5 years. This shows strong relative performance consistency of the fund manager.
Source: Bridge Investments Research
Rolling Returns of Sundaram Select Midcap Fund versus the benchmark index
In our view Rolling Returns is one of the best performance measures because it is unbiased and measures performance across different market conditions – bull market, bear market and flat market. Rolling returns across different market conditions shows the performance consistency of the fund manager.
The chart below shows the 3 year rolling returns of Sundaram Select Midcap Fund versus the benchmark index, BSE – Midcap over the last 5 years. We chose a 3 year rolling returns period because we think that 3 years should be the minimum investment tenure of an equity fund. In the last 5 years, we had periods of bull market, bear market and also flat market.
Source: Bridge Investments Rolling Returns Calculator
We can see that the fund has beaten the BSE Midcap Index 100% of the times in the last 5 years. The rolling returns chart shows very strong performance consistency on the part of Sundaram Select Midcap Fund. Moreover, we can also observe that, the rolling returns outperformance margin of the fund versus the benchmark is fairly stable most of the time. This is an evidence of structured fund management approach and prudent risk management practices.
Rolling Returns of Sundaram Select Midcap Fund versus Midcap Funds category
The chart below shows the 3 year rolling returns of Sundaram Select Midcap Fund versus the small and midcap funds category over the last 5 years.
Source: Bridge Investments Rolling Returns Calculator
The rolling returns chart of Sundaram Select Midcap Fund versus the small and midcap funds category over the last 10 years is a testimony of the performance consistency of this fund versus its peers. We can see that, the fund beat the midcap category averagereturn 100% of the times in the last 5 years. Investors can also observe that the 3 year annualized rolling returns rarely dropped below 20%.
Portfolio of Sundaram Select Midcap Fund
S. Krishna Kumar, the fund manager of Sundaram Select Midcap Fund, is respected in the industry circles as one of most proficient fund managers, especially in the small and midcap space. The investment style of Krishna Kumar for the Sundaram Select Midcap Fund is bottoms –up with a blend of growth and value investing. The portfolio has a bias towards cyclical sectors like banking and finance, industrial products, capital goods, auto ancillaries and textiles. The fund manager is positive on cyclical sectors that feed on the economic recovery theme like industrials, engineering & capital goods, transportation and financials.
Wealth Creation by Sundaram Select Midcap versus BSE – Midcap
The chart below shows the growth of Rs 100,000 lump sum investment in Sundaram Select Midcap Fund over the last 5 years, compared to the growth of Rs 100,000 lump sum investments in Sensex and BSE-Midcap Index over the same period.
The chart above shows that, Rs1 Lakh lump sum investment in Sundaram Select Midcap Fund would have grown to over Rs 3 Lakhs in the last 5 years.
SIP Returns
The chart below shows the returns of Rs 5,000 monthly SIPs in Sundaram Select Midcap Fund (growth option) since inception. The chart shows why Sundaram Select Midcap Fund SIP (shown by the blue line) has been one of the biggest wealth creators amongst all equity funds. With a cumulative investment of just Rs 3 Lakhs, the investor could have accumulated a corpus of nearly Rs 6 Lakhs.
Conclusion
The Sundaram Select Midcap Fund has delivered over 10 years of strong and consistent performance. We have seen that, Sundaram Select Midcap fund has outperformed the BSE-Midcap Index and the category across different performance measures.
No wonder, Sundaram Select Midcap Fund is one of the biggest wealth creating midcap equity mutual funds in the last 10 years. Sundaram Select Midcap Fund is suitable for variety of long term financial goals like retirement planning, children’s education and marriage or simply wealth creation in the long term.
Systematic Investment Plan (SIP) over a long investment term is the ideal form of saving and investing, but investors can tactically take advantage of market corrections to invest in lump sum also.
You may like to read what is mutual fund SIPs and why it is beneficial Please contact us if you want to know more about the fund and potential benefits.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.