Sundaram Small Cap Fund Direct Plan Transfer of Income Distribution cum Capital Withdrawal

Sundaram Small Cap earns a Low Process Pillar rating.

The main driver of the rating is its parent firm's inferior risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.4 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. Subpar risk-adjusted performance also holds the process back. This can be seen in the fund's 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 37% further detracts from the process. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

This strategy has more exposure to the Growth factor than the Small-Cap Morningstar Category average. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Examining additional factor exposure, this strategy has consistently favored low-quality stocks compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy has also leaned away from the stocks of companies with high dividend or buyback yields over these years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In the most recent month, however, the fund's Yield exposure was in line with the Morningstar Category average. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. This contributes to a higher-risk, higher-reward approach. In this month, the strategy also had more exposure to the Volatility factor over its peers. 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 6.2 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared with category peers are basic materials and technology, underweight the average by 4.8 and 2.8 percentage points of assets, respectively. The portfolio is positioned across 71 holdings and is quite concentrated. In particular, 25.2% of the portfolio's assets are housed within the top 10 holdings, versus the category’s 17.9% average.