A Guide To Investing In Sundaram Mid Cap Fund

The Sundaram Mid Cap Fund is a mutual fund scheme that aims to achieve capital appreciation by investing in mid-cap stocks. The fund defines a 'midcap' as a stock whose market capitalization does not exceed that of the 50th stock listed with the NSE. The scheme has a very high-risk rating and investors are warned not to invest if they need to redeem their investment in under seven years. The fund has no lock-in period and can be purchased directly from the Sundaram Mutual Fund website or through platforms like MF Central and MF Utility.

How to buy Sundaram Mid Cap Fund shares

To buy shares in the Sundaram Mid Cap Fund, you can purchase them directly from the website of the fund house, Sundaram Mutual Fund. Alternatively, you can buy shares through platforms such as MF Central and MF Utility. If you are uncomfortable with buying shares online, you can seek help from a mutual fund distributor, such as a bank.

The Sundaram Mid Cap Fund is a mutual fund scheme that was launched by Sundaram Mutual Fund on 26 February 1996. The fund aims to achieve capital appreciation by investing in mid-cap stocks. The fund defines 'midcap' as a stock whose market capitalization does not exceed that of the 50th stock listed with the NSE when securities are sorted in descending order of market capitalization.

The fund has a minimum SIP investment of ₹100 and a minimum lumpsum investment of ₹100. It is rated as a Very High-risk fund. As of 4 December 2023, the NAV of Sundaram Mid Cap Fund - Regular Plan was ₹989.0598.

The fund's investment strategy

The Sundaram Mid Cap Fund is a mutual fund scheme that aims to achieve capital appreciation by investing in mid-cap stocks. The fund defines a 'mid-cap' as a stock whose market capitalization does not exceed that of the 50th stock listed with the NSE when securities are sorted in descending order of market capitalization.

The fund has no lock-in period, and investors can buy mutual funds directly from the Sundaram Mutual Fund website or through platforms like MF Central and MF Utility. It is suitable for investors looking to invest money for at least 3-4 years and seeking high returns, while also being prepared for the possibility of moderate losses.

Capital gains taxation

Dividends are added to the income of the investors and taxed according to their respective tax slabs. If an investor's dividend income exceeds Rs. 5,000 in a financial year, the fund house also deducts a TDS of 10% before distributing the dividend.

It is important to note that taxation is categorized as long-term capital gains (LTCG) and short-term capital gains (STCG) depending on your holding period and the type of fund.

The fund's performance

The Sundaram Mid Cap Fund has a history of strong performance, with a focus on investing in mid-cap stocks. The fund defines a 'midcap' as a stock whose market capitalization does not exceed that of the 50th stock listed with the NSE.

As of recently, the fund's returns are better than the category average. It has delivered 24.05% returns since its inception 21 years ago. The fund's holdings are primarily in Large Cap stocks and debt instruments, indicating a conservative investment strategy.

The fund's Net Asset Value (NAV) has been fluctuating but remains relatively high. As of 4th December 2023, the NAV was ₹989.0598, and as of 17th October 2024, it was ₹1,516.11. The fund's Asset Under Management (AUM) was ₹8,478 Cr as of 31st October 2023.

The fund has a very high-risk rating and is suitable for investors who are willing to invest for at least 3-4 years and can tolerate moderate losses. It is important to note that investors should not invest in this fund if they need to redeem their investment in less than seven years.

The expense ratio of the fund is 1.81, and it has consistently higher annualised returns than the category average for the past 1 year and 3 years. The fund has a 1% exit load for units more than 25% of the investments if redeemed within 365 days.

In terms of taxation, if the mutual fund units are sold after 1 year from the investment date, gains up to Rs 1 lakh in a financial year are tax-exempt. Gains over Rs 1 lakh are taxed at a rate of 10%. If the units are sold within 1 year, the entire amount of gain is taxed at 15%.

The fund's risk level

The Sundaram Mid Cap Fund is rated as a "Very High Risk" investment option. This is due to the fund's focus on investing in mid-cap stocks, which are inherently riskier than larger stocks. Mid-cap stocks tend to fall more when stock prices fall, so while higher returns can be expected in the long term, there will be severe ups and downs along the way.

As per SEBI's Riskometer, the Sundaram Mid Cap Fund falls in the highest risk category. This means that there is a very high risk of negative returns on your investment.

The fund's portfolio is considered conservative, with most of its holdings in Large Cap stocks and debt instruments. However, it is important to note that the fund is mandated to invest at least 65% of its assets in mid-cap stocks at all times, which contributes to the overall risk level of the fund.

When considering investing in the Sundaram Mid Cap Fund, it is crucial to keep in mind the associated risks. Investors should be prepared for the possibility of moderate to severe losses and ensure that they are comfortable with the level of risk involved. It is recommended to invest only if you are planning to hold the investment for at least seven years, as shorter investment horizons may not allow enough time to ride out the market volatility associated with mid-cap stocks.

Frequently asked questions