Top MFs: Sundaram Rural and Consumption Fund

Objectives

Sundaram Rural and Consumption Fund is a Thematic-Consumption mutual fund scheme from Sundaram Mutual Fund.

The Scheme seeks to generate returns by investing predominantly in equity / equity-related instruments of companies engaged in rural and/or consumption business.

Fund Highlights

Sundaram Rural and Consumption has been in existence for 10 yrs, having been launched on 01/01/2013.

The fund has ₹1,220 Crores worth of assets under management (AUM) as on 31/12/2021 and is medium-sized fund of its category.

The fund has an expense ratio of 1.26%, which is higher than what most other Thematic-Consumption funds charge.

It is benchmarked against NIFTY India Consumption Total Return Index.

Dedicated vehicle to play the Rural and/ or Consumption theme - sectors that are undergoing structural transformation and are expected to drive growth over the next decade.

The Current Net Asset Value of the Sundaram Rural and Consumption Fund - Regular Plan as of 25 Jan 2022 is Rs 56.6897 for Growth option of its Regular plan.

The Sundaram Rural and Consumption Fund - Regular Plan currently holds Assets under Management worth of Rs 1288.56 crore as on Oct 31, 2021.

The expense ratio of the fund is 2.24% for Regular plan as on Oct 31, 2021.

For units more than 25% of the investments, an exit load of 1% if redeemed within 365 days

Minimum investment required is Rs 100 and minimum additional investment is Rs 100. Minimum SIP investment is Rs 100.

Returns

Sundaram Rural and Consumption Fund returns of last 1-year are 18.56%. Since launch, it has delivered 14.64% average annual returns. The fund has doubled the money invested in it every 6 yrs.

Its trailing returns over different time periods are: 24.29% (1yr), 12.14% (3yr), 11.75% (5yr) and 11.75% (since launch). Whereas, Category returns for the same time duration are: 39.75% (1yr), 18.54% (3yr) and 16.78% (5yr).

Sector and stock wise exposure

The fund has the majority of its money invested in FMCG, Consumer Durable, Financial, Automobile, Chemicals sectors. It has taken less exposure in FMCG, Consumer Durable sectors compared to other funds in the category.

The fund's top 5 holdings are in Varun Beverages Ltd., Hindustan Unilever Ltd., Asian Paints Ltd., ICICI Bank Ltd., ITC Ltd.

The fund largely follows a Growth oriented style of investing and invests across market capitalisations - around 54.12% in giant & large cap companies, 38.32% in mid cap and 7.56% in small cap companies.

Tax Implications

1. Gains are taxed at a rate of 15% (Short-term Capital Gain Tax - STCG) if units are redeemed within 1 year of investment.

2. For units redeemed after 1 year of investment, gains of upto Rs. 1 lakh accruing from those units in a financial year shall be exempted from tax.

3. Gains of more than Rs. 1 lakh will be taxed at a rate of 10% (Long-term Capital Gain Tax - LTCG).

4. For Dividend Distribution Tax, the dividend income from this fund will get added to the income of an investor and taxed according to his/her respective tax slabs.

5. Also, for dividend income in excess of Rs 5,000 in a financial year; the fund house shall deduct a TDS of 10% on such income.

Fund manager

The Sundaram Rural and Consumption Fund is managed by Rohit Seksaria (Since Jul 23, 2020) and S Bharath (Since Apr 25, 2018).

Expert comment

The suggested investment horizon of investing into Sundaram Rural and Consumption Fund is >3 years. The suggested investment horizon is the minimum time required for holding investments in the fund to reduce its downside risk and ensure that the returns become more predictable.

The scheme's ability to deliver returns consistently is lower than most funds of its category. Its ability to control losses in a falling market is low.