The Sundaram Select Midcap Fund is the top rated mid-cap equity mutual fund offering from Sundaram Asset Management Company, a leading fund house in India. Since its inception, this open-ended mid-cap equity fund has been a popular pick among risk tolerant investors seeking fast paced capital appreciation of their investment. Though the fund has high exposure to mid-cap companies by established mandate, in recent years, Sundaram Select Mutual Fund has also invested in large cap companies in an attempt to diversify its portfolio and mitigate the effects of market volatility risks inherent to mid-cap investments.
About Midcap Equity Funds
A midcap equity fund, as the name suggests, refers to a special type of equity mutual fund that primarily invests in listed and unlisted companies whose market capitalization is less than the 50 or 100 largest companies listed on the stock exchange. Some midcap funds target specific companies that though currently valued in the mid-cap segment, have a sound business model and good cash flow, which means that they will potentially grow further in the coming years and emerge as a large cap company. The flip side is that the potentially high ROI on mid-cap investments does come with some additional risk attached to the investment. This is because mid-cap equity funds are prone to more volatility than large cap-oriented mutual funds. Hence, a majority of mid-cap mutual are classified as “high” risk investment options.
Sundaram Select Midcap Fund Investment Objective
The key objective of the Sundaram Select Midcap Fund is to provide the investor with capital appreciation through investments made mainly into mid-cap equity stocks. As per the fund, mid cap stocks are those where the valuation of the company’s equities is smaller than the top 50 companies listed on India’s NSE. However, the fund currently does hold a few large cap investments though they form a minority portion of the scheme’s overall portfolio.
Risk Level of the Sundaram Select Midcap Fund
The Sundaram Midcap Fund, as the name suggests, is mostly invested in various listed companies whose market capitalization is smaller than those of the largest companies listed on the stock exchange. Midcap companies have high growth potential. Hence, mutual funds invested in them can provide high ROI when markets are witnessing a bull run. On the flip side, mid-cap company shares are also prone to a great deal of market volatility i.e. greater than that observed price fluctuations as compared to large cap companies. As a result, they are perceived to be a relatively risky investment in the equity funds category. Thus even after investment diversification across multiple industries and sectors, the Sundaram Select Midcap Fund features the “high” risk tag due to its high degree of exposure to midcap equities.
Tax Considerations of the Sundaram Select Midcap Fund
The Sundaram Select Midcap Fund is a midcap equity fund, hence taxation rules of equity mutual funds will apply. As per currently applicable rules, short term capital gains apply to units of the fund that have been held for less than 1 year from the date of allotment, while long term capital gains are applicable in case the units have been held for at least 1 year from the date of redemption. Short term capital gains on equity funds are taxable at 15% of the total profits obtained at the time of transfer/redemption of Sundaram Select Midcap Fund units. The long term capital gains in case of equity funds are currently completely exempt from tax. Dividends obtained from midcap equity funds such as Sundaram Select Midcap Fund are completely tax exempt in the hands of the investor.
Sundaram Select Midcap Fund Key Features and Statistics
Inception: This midcap fund was first available for investment in June 2002 and has been among the top performers in the category since its launch.
Entry Load: The scheme has no entry load as entry load of mutual funds have been discontinued after a SEBI directive to that effect.
Exit Load: The scheme features an exit load in case the investor redeems his/her units prior to completion of 365 days counted from the unit allotment date. The current exit load applicable in such cases is 1% of the total amount redeemed by the investor.
Minimum Investment Amounts: The minimum investment amount for new investors of the scheme is Rs. 5000 with minimum additional investment requirement of Rs. 500 for existing investors of the scheme. The minimum individual SIP installment of the Sundaram Select Midcap Fund is Rs. 250.
Fund Manager: The Sundaram Select Midcap Fund is currently managed by Mr. S. Krishna Kumar who has been managing the fund since 2012. Prior to joining Sundaram, he was with BNP Paribas Mutual Fund AMC and Anush Shares & Securities. He has an MBA from LIBA Chennai and has a B.Tech Degree from National Institute of Technology, Trichy.
Plans and Options for Sundaram Select Midcap Fund
Direct Plan: In case you want to invest in Sundaram Select Midcap Fund with a lower expense ratio as compared to the regular plan, you may choose to invest in the direct plan of the scheme. If you avail the direct plan, you can look forward to receiving a slightly higher ROI on your investment versus regular plan. However, you do have to pay a slightly higher NAV for your units. Additionally, direct plans can only be availed in case you are investing directly with Sundaram Mutual Fund AMC and not through a 3rd party.
Regular Plan: The most commonly availed investment plan for this scheme is the regular plan, which can be availed through either the AMC or various registered 3rd parties such as Paisabazaar.com. These plans have a higher expense ratio than direct plans; however, they also have a lower NAV. More importantly, the returns provided by a regular mutual fund plan are only marginally lower than those provided by the direct plan.
Growth Option: The growth option of Sundaram Select Midcap Fund may be availed by investors of both the direct and the regular plans. By choosing this option, the investor is not liable to receive any dividend payouts when staying invested in the scheme. Any profits made by the scheme through its investments are invested into same or other schemes leading to an increase in the AUM of the fund as well as its unit NAV. This increase provides capital gains to the investor when he/she switches or redeems the units of the scheme at a later date.
Dividend Option: Mutual fund units with the dividend option provide dividend payouts similar to equity stock, however, this happens only if there is a distributable surplus available and the fund management decides to distribute the gains. As mutual fund returns are not guaranteed, there is no surety that dividend distribution will occur at any given period of time. Dividends are issued on a per unit basis hence the NAV of each unit decreases based on the amount of dividend declared by the scheme.
Top Equity Holdings of Sundaram Select Midcap Fund
The following are some top equity investments made by Sundaram Select Midcap Fund across key industries and companies in India.*
|Banking and Financial Services||City Union Bank, DCB Bank, Federal Bank, Karur Vysya, Bank of Baroda, Indian Bank, Punjab National Bank, IIFL Holdings, Ujjivan Financial, LIC Housing Finance, Bajaj Finserv, Cholamandalam, M&M Financial, Shriram City, etc.|
|Automotive||Force Motors, Exide Industries, Sundaram Clayton, WABCO India, Apollo Tyres, etc.|
|Chemicals and Pharmaceuticals||Tata Chemicals, UPL, Coromandel International, Castrol, Bayer CropScience, Laurus Labs, Strides Shasun, etc.|
|Engineering and Capital Goods||Grindwell Norton, FAG Bearings, Timken, ABB India, Thermax, etc.|
|Manufacturing||Mahindra CIE Automotive, Max Financial Services, Arvind, SRF, Vardhman Textiles, etc.|
|Consumer Durables/Non-Durables||Whirlpool, Emami, Jyothy Labs, Procter and Gamble Hygiene, and Healthcare, etc.|
|Information Technology||L&T Technology, MphasiS, Oracle Financial Services, Persistent, etc.|
|Food and Beverages||GlaxoSmithKline Consumer Healthcare, Varun Beverages, Tata Global Beverages, etc.|
|Oil and Gas||Gujarat State Petronet, Indraprastha Gas, Petronet LNG, etc.|
|Retail and Real Estate||HUDCO, Aditya Birla, Trent, etc.|
|Services and Utilities||Apollo Hospital Enterprises, Healthcare Global Enterprises, Mahindra Holidays and Resorts India, CESC, etc.|
|Others||Ramco Cements, HSIL, Century, Jagran Prakashan, PVR, NALCO, V-Guard Industries, CRISIL, Gateway Distriparks, Honeywell Automation, etc.|
*The above list is an illustrative example and subject to changes based on business requirements of Sundaram Mutual Fund AMC and/or guidelines of SEBI.
Investing in Sundaram Select Midcap Fund through Paisabazaar.com
Investing in mutual funds has definitely become a lot easier with the advent of various online technologies such as Aadhaar-based e-KYC, online payment system, online investment accounts and so on. With the free online investment account from Paisabazaar.com, you get all of these cutting edge benefits as well as access to equity, debt and hybrid funds offered leading fund houses such as Sundaram Mutual Fund AMC’s Select Midcap Fund. Through the powerful online portal of Paisabazaar.com, you can choose a fund such as Sundaram Select Midcap Fund to invest in along with a selection of options such as growth or dividend before providing details of your total investment amount. The payment process on Paisabazaar.com is completely online through Netbanking service of your registered Indian bank. On completion of the purchase, units of the Sundaram Select Midcap Fund will be allotted to your mutual fund account based on the applicable NAV. In case you need additional help selecting your Sundaram Mutual Fund Investment, you can either call us back or call on the Sundaram Mutual Fund Customer Care Number.