Sundaram Equity Hybrid Fund has outperformed with 9.04 percent returns during the last year. Rahul Baijal, Fund Manager-Equity, Sundaram Mutual Fund, attributes the reason for Equity Hybrid Fund’s outperformance to the key changes he made.
Even though Aggressive hybrid fund category has dissatisfied investors with a one-year CAGR (Compound Annual Growth Rate) of about 4.5 percent last year, the Equity Hybrid Fund scheme of Sundaram Mutual Fund has made 9.04 percent returns during the same period.
The Equity Fund Manager told The Economic Times how he managed the scheme to outperform the category by a large margin. He said that three to four key changes he made have helped in the outperformance of the scheme.
First, he followed the focused style and reduced the number of stocks in the equity portfolio.
Next, he made an allocation shift of about 12 percent in the Sundaram Equity Hybrid Fund portfolio from midcaps towards large caps. This sort of multicap approach has made a big difference, he said.
Thirdly, he aligned the stock picking in large-caps of the Equity Hybrid Fund scheme with the Select Focus Fund which he managed. The Select Focus Fund is the fund house’s flagship large-cap product.
The mixture of all these three key changes implemented by him has helped the scheme in accomplishing the outperformance, said Baijal.
He suggested that the equity hybrid scheme is a great product for a beginner investor who seeks to make a transition from purely fixed income schemes. He also added that this product balances the risk between equity and debt exposure, as well as balances the risk between large and midcaps within equities, irrespective of the market cycle.
Generally, the best time limit for an investor to invest in equity MFs is five to seven years. That would be effective for the equity hybrid category also, said the Sundaram MF’s Fund Manager. He finally recommends the investors to “stay invested for steady-state long-term compounding returns.”
Baijal has been managing the Sundaram Equity Hybrid Fund from January 1, 2018.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]