Fund of Fortnight

Reason for recommendation

Sundaram Mid Cap Fund - Direct Plan (Growth)




The risk off trade that started in the year 2018 has continued till now and has led to a sharp fall in the mid-cap and small-cap stocks. They are yet to reach their earlier highs. Among the several reasons contributing to such lacklustre performance is the uncertainty arising from the result of the general election. After the exit polls suggesting a clear majority for NDA most of this ambiguity is now gone. This may lead to a huge surge in the market, going ahead, we believe mid-cap stocks are likely to be re-rated helping funds dedicated to this sector to generate superior returns.

Sundaram Mid cap fund is one such fund that is likely to benefit out of such re-rating. The reason being it is a pure mid-cap fund with mid-cap stocks forming 82.36 per cent of the entire corpus. Compare this with the category average of 80.9 per cent. Moreover, small-cap stocks, which again are likely to benefit from risk on trade forms 16.16 per cent of the entire corpus. The category average has been around 10.88 per cent. Hence, in case the market picks up and maintains its momentum from hereon, this fund is likely to outperform.



What is also in favour of the fund is its well-diversified portfolio of 62 companies with no single company exceeding 5 per cent of weightage. Going ahead, the presence of companies like Ramco Cements, Honeywell Automation and RBL Bank is going to help the fund perform better than its peers. Therefore, the fund is suitable for those investors who are willing to take a risk and remain invested for the medium to long run.