https://www.advisorkhoj.

com/articles/mutual-funds/sundaram-large-cap-fund:-a-consistent-performing-
fund-to-invest-in

Sundaram Large Cap Fund: A consistent performing fund to invest in

According to SEBI guidelines, the top 100 stocks by market capitalization in India are known as
Large Cap stocks. The market capitalization of Large Cap companies lies between Rs 690 bn to
Rs 18 trillion. (AMFI data as on 31st December 2023). The core sectors like petroleum products,
oil and gas, coal, power, cement steel, oil and gas etc. comprise the large cap companies. Large
cap funds invest at least 80% of their assets in large cap stocks.

Why invest in Large Cap Companies?

1. During economic downturns and recessive markets, Large Cap funds are likely to face fewer
financial upheavals. Large Cap Companies are market leaders in their respective industries and
can weather volatility better than the mid or small cap companies.

2. Large cap stocks tend to be less volatile than midcap and small cap stocks, especially in deep
corrections or bear markets. The chart below shows the biggest drawdowns in the market over the
last 20 years. You can see large caps suffered less drawdowns compared to small / midcaps.
 Source: National Stock Exchange, Advisorkhoj Research

3. Large Cap funds are the highest traded stocks on the stock exchange. So, they are highly
liquid. One of the biggest advantages of liquidity in large cap funds is that the fund manager can
meet redemption pressures without incurring high impact costs. Impact cost is the cost that a
buyer or seller of stocks incurs while executing a transaction due to the prevailing liquidity
condition on the counter. A major disadvantage of stocks with low liquidity is that the fund
manager may have to sell a stock at a much lower price to meet redemption needs.

4. Since midcaps and small caps have relatively less free-floating shares, their trading volumes
are thinner. As a result, the prices of these stocks can run up much higher – high demand and less
supply. Large caps, on the other hand, do not have this problem because there is always a good
supply of shares in large cap stocks due to high public ownership (institutional and retail).

In this article we will discuss the Sundaram Large Cap Fund as an investment option.

Sundaram Large Cap Fund Regular Growth

Sundaram Large Cap Fund is an open-ended large cap equity scheme with inception date of
July 2002. The fund named Sundaram Select Focus merged into Sundaram Blue chip Fund on
Dec 24, 2021, following which Principal Large Cap Fund merged into these and the surviving
scheme was renamed effective Dec 31, 2021. As of 4th February 2024, the fund has an NAV of
18.9808 for its regular growth plan (as on 16 Feb,2024). The Benchmark for the fund is Nifty 100
TRI. The expense ratio of the scheme regular plan is 1.9% as on 2nd February 2024. The fund is
managed by Sudhir Kedia and Ravi Gopalakrishnan since May 16, 2022.

Performance of Sundaram Large Cap Fund Regular Growth –

SIP Returns - A monthly SIP of Rs 10,000/ started at the inception of the fund would have grown
to Rs 1,53,71, 433/- as on 16th February 2024 against a total investment of Rs 25.90 Lakhs – The
fund has given an XIRR return of 14.38%.
 Source: Advisorkhoj Research. Disclaimer: Past performance is not indicative of future
performance.

From the above chart you can also see that out of 259 SIP instalments, the fund had delivered
more that 12% return on 192 instalments. This speaks very high about the return consistency of
the fund.

Lumpsum returns - A lumpsum of Rs 1,00,000/- invested in the fund at inception would have
grown to a corpus of Rs 34.19 Lakhs delivering a CAGR return of 17.8% which is a bit higher than
the NIFTY 50 TRI return of 17.20% in the same period (Return as on Jan 31, 2024 - Source:
Advisorkhoj Research).

Investment Strategy of the Sundaram Large Cap Fund

The scheme’s objective is to generate long-term capital appreciation by investing predominantly in

large cap stocks. The AUM of the fund stood at Rs 3,314.86 Crores as of January 2024. The fund
managers are overweight in the sectors like Pharma & Biotechnology, Construction, and
Beverages and underweight on Diversified FMCG, Power, and Automobiles while allocating
assets between sectors. As of January 2024, the scheme has 99.3 % equity allocation. Below is
the chart for the top 10 company holdings of the fund.

Source: Sundaram Large Cap Fund Factsheet – January 2024

Why invest in Sundaram Large Cap Fund now?

1. India's relative light positioning in the emerging market (EM) portfolios, and their rising size is
gradually making Indian markets more relevant for global mandated funds. Therefore, structural
positives such as the rising investment cycle, expected political stability along with multi-year
growth visibility, and peaking of the dollar has a potential to draw higher foreign flows into large
caps in 2024.

2. Large caps are trading at more reasonable valuations compared to midcaps and small caps.

3. Retail assets under management (AUM) moved from large cap funds to mid / small cap fund in
the CY 2023. We may see trend reversal and portfolio rebalancing in CY 2024. This will boost
large cap fund returns.

4. The fund has delivered consistent return since its inception and has been able to beat
Benchmark and Category average returns.
Who should invest in Sundaram Large Cap Fund?

The Sundaram Large Cap Fund is suitable for:

1. Investors who have a moderately high to high-risk appetite with a goal of creating a corpus
through long term capital appreciation.

2. It is suited for investors looking to invest for their long-term financial goals like retirement
planning, children’s higher education, children’s marriage, wealth creation etc.

3. New and young investors who would like to start their investment journey with a low volatile
equity fund as large cap funds are less volatile compared to midcap or small cap funds.

4. Investors who have at least 5 years investment horizon.

Investors may contact their mutual fund distributor or financial planner to understand how the fund
can align with their investment goals.

Mutual Fund Investments are subject to market risk, read all scheme related documents
carefully

Author Details

Anamika Pareek

Anamika is the Senior Editor at Advisorkhoj. She is a Calcutta University alumnus and also
holds a Masters’ degree in Educational Planning and Management. Deeply passionate about
writing, Anamika has diverse skills in research, management, execution and communication
in the Educational Technology industry as well as the Financial sector. Coupled with this,
more than two decades of experience in administration and management of institutions has
given her a deep understanding in the pulse of business through customer satisfaction.

In her corporate roles, Anamika has headed large teams and contributed to the enhancement
of their talent through active learning and development programs. Anamika has spearheaded
projects for meeting targets in business and contributed to reaching overall business goals.