Sundaram Mutual Fund has launched Sundaram Bluechip Funds in Large cap open fund category. The fund would remain open for subscription from 17th September 2020 to 30th September 2020.
Sundaram Blue Chip Fund NFO Issue Details
This is an open-ended equity fund. Here are the NFO issue details.
| Scheme Opens | 17-Sep-20 |
| Scheme Closes | 30-Sep-20 |
| Scheme Plans | Direct and Regular Growth and Dividend |
| Minimum investment (Lumpsump) | Rs 100 |
| Minimum investment (SIP) | Rs 100 / 12 months |
| NAV of the fund | Rs 10 during NFO period |
| Entry Load | 0 |
| Exit Load | 1% redemption within 1 year |
| Risk | Moderate High |
| Max Total expense Ratio (TER) | 2.25% |
| Benchmark | NIFTY 100 TRI |
| Fund Manager | Rahul Baijal & Krishnakumar S |
The key fundamentals of the scheme one should know of the Sundaram blue chip fund scheme are
The Investment Objective of the scheme is to generate capital appreciation by investing in Large Cap Stock. However, there can be no assurance that the investment objective of the Scheme will be achieved.
The scheme’s asset allocation attributes shall be
| Minimum | Maximum | Risk Profile | |
| equity & equity related securities of large cap stocks | 80% | 100% | High |
| Other equity | 0% | 20% | High |
| Investment in overseas securities / ADR’s / GDR’s | 0% | 20% | High |
| Fixed Income and money market Instruments/Cash & cash equivalent | 0% | 20% | Low to Medium |
| units issued by ReIts / InvIts | 0% | 10% | Medium to High |
The scheme’s Investment and portfolio construction strategy will be that
- scheme will invest in a 45-50 stock portfolio diversified across sectors which aims to reduce volatility
- the strategy will be Blend of growth and value stocks which would give relatively stable returns.
- The scheme will Invest in stocks which are part of the large cap universe having relatively lower impact of volatility.
- Focus on a three-pronged Bluechip quality framework for stock selection
» Quality of management
» Quality of business model
» Quality of financials
- The scheme may allocate 20% in Mid cap category depending on the market opportunities.
- Portfolio construction will be based on bottom-up fundamental stock picking blended with top-down sectoral and macro trends
Who can invest in this NFO?
Any of the following can invest in this scheme.
1) Resident Individuals
2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,
3) NRI’s
4) Foreign Portfolio Investors
What are the Large Cap Funds?
Large cap is funds are the key component for any investor’s portfolio. These are the top 100 companies by market capitalisation in India in terms of SEBI definition and are categorised by AMFI on half yearly basis.
Why one should consider Large cap funds in his portfolio?
- Large caps stocks are more attractive among the investors as these companies have the proven business model, stability across business cycles because of their long run existence, strong balance sheets, High Liquidity and Well diversifying universe, benefit of large-scale operations.
- Large caps have consistently compounded over long term. Nifty 50 TRI has given average 11% of CAGR over a period of 15 to 20 years (from August 2000 to Aug 2020).
- The Large cap funds are considered less risky than small and mid-cap funds. It gives more Stable returns across horizons with relatively lower drawdowns.
Why Bluechip Funds?
- Blue chip funds invest in large cap stocks which are considered as more stable. Since such companies are large in size, these are comparatively safer companies compared to midcap or small cap stocks.
- These Bluechip funds are considered relatively safer as they invest in large cap stocks that are believed to be fundamentally strong. If there is a huge stock market crash, such large cap stocks would tend to recover faster during the recovery phase.
- Bluechip stocks might pay dividend too. This could provide dividend yield to your portfolio though not guaranteed.
Some risk factors you should consider before investing in such funds
- This Bluechip scheme majorly invests in large cap stocks that may provide stable returns. You can’t expect to be multi-baggers like we see in midcap or small cap segment.
- It would invest up to 20% in debt instruments. Debt instruments have become risky these days.
- It invests up to 20% in overseas securities / ADRs which could be risky along with currency risk.
- Investors should not assume any guaranteed returns from such funds.
- Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.
- Read the scheme related documents carefully before investing in such schemes.
Below is the performance of existing Bluechip funds
| Fund Name | 6 months | Annualised Returns | ||
| 1 Year | 3 Years | 5 Years | ||
| Axis Bluechip Fund | 21.72% | 8.39% | 8.44% | 10.75% |
| Canara Robeco Bluechip Equity Fund | 31.52% | 16.59% | 7.62% | 10.21% |
| ICICI Prudential Bluechip Fund | 33.16% | 4.76% | 2.89% | 8.06% |
| Kotak Bluechip Fund | 34.76% | 10.52% | 4.29% | 7.62% |
| SBI Bluechip Fund | 2% | 3% | 2% | 8% |
| Indiabulls Bluechip Fund | 25.42% | 2.26% | 1.04% | 6.87% |
| Franklin India Bluechip Fund | 26.32% | 1.66% | 1.08% | 4.30% |
Note: above returns are as on 22nd Aug 2020. Return above 1 year are compounded annually
How the other schemes of the Sundaram Mutual Fund House performed
| Scheme Name | Fund Manager Name | 6M | 1Y | 3Y | 5Y | Inception |
| Sundaram Select Focus(G) | Rahul Baijal | 28.81% | 5.85% | 4.41% | 8.34% | 17.36% |
| Sundaram Large And Mid Cap Fund (G) | S.Krishnakumar | 25.42% | 6.35% | 3.95% | 9.17% | 9.57% |
| Sundaram Equity Fund Reg (G) | S.Krishnakumar / S. Bharath | 29.44% | 3.16% | 0.00% | 0.00% | 3.43% |
| Sundaram Services Fund-Reg (G) | S.Krishnakumar / Rahul Baijal | 27.77% | 10.53% | 0.00% | 0.00% | 9.34% |
| Sundaram Rural And Consumption Fund(G) | S. Krishnakumar / S. Bharath | 24.65% | 7.08% | -0.47% | 10.24% | 10.39% |
| Sundaram Fin Serv Opp Fund (G) | Rahul Baijal / Ratish Varier | 11.17% | -9.92% | -2.33% | 5.84% | 11.10% |
| Sundaram Diversified Equity(G) | S. Bharath / S.Krishnakumar | 28.43% | 2.33% | -2.43% | 5.84% | 13.69% |
| Sundaram Mid Cap Fund(G) | S.Krishnakumar | 25.06% | 5.02% | -4.18% | 5.50% | 23.18% |
| Sundaram Infra Advantage Fund(G) | Ratish Varier / S.Bharath | 26.49% | -0.38% | -5.21% | 3.45% | 7.45% |
| Sundaram Small Cap Fund(G) | Ratish Varier / S.Krishnakumar | 37.24% | 10.81% | -6.68% | 3.51% | 14.23% |
Note: above returns are as on 22nd Aug 2020. Return above 1 year are compounded annually
Suitability to Investors
The fund is suitable to the investor who is seeking capital appreciation over medium to long term with lower volatility and investments in equity and equity related securities of large cap companies.
Our recommendation:
Since the scheme is going to invest in large cap blue chip fund, investor with low risk appetite can invest in this fund. You can expect return of around 10% to 15% from this fund if invested for a time period of around 3 to 7 years. In the current scenario post lockdown due to covid-19 where economy is set to opening up and taking recovery path large cap companies would be in much better position for growth due to their proven business model, long run existence, large scale operations with wide business diversity. Sundaram Bluechip NFO would be a good opportunity for investor to capture growth potential in these large cap companies over medium to long term.
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Mutual Funds Investments are subject to market risk, please read all scheme related documents before investing