Sundaram Diversified Equity Fund Growth INF903J01538

Sundaram Diversified Equity earns a Below Average Process Pillar rating.

The process benefits from its team of two portfolio managers, which is sufficient to execute the process. However, the rating is held back by the fund's weak long-term risk-adjusted performance. This can be seen in its 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period. The parent firm's inferior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.5 stars, also holds the process back. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

This strategy leans toward larger, higher-growth companies compared with its average peer in the ELSS (Tax Savings) Morningstar Category. Analyzing additional factors, this strategy has consistently had less exposure to yield compared with its Morningstar Category peers during recent years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings fall. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Given the low trading volume of holdings, this strategy has also tilted toward illiquid assets during these years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in financial services by 2.6 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared with category peers are utilities and consumer cyclical, with utilities underweighting the average portfolio by 2.7 percentage points of assets and consumer cyclical similar to the average. The portfolio is composed of 63 holdings and is relatively concentrated. In particular, 44.6% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 39.6%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 15% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.