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Sundaram Mutual’s Equity Savings Fund has a 42% net equityallocation and gross above 70% to qualify for equity taxation. Sudhir explainsthat with long term equity return expectations of 15% and long term debt returnexpectations of 5-6%, a 40% allocation to equity is necessary to strive foraround 7% return net of expenses – which enables investors to stay ahead ofinflation.
Since the fund is an amalgamation of the erstwhile PrincipalMF’s product (which was a consistent top decile performer) and Sundaram’sproduct, the blended past performance track record does not look as impressiveas the standalone data of the Principal product. Going forward, expect the fundto maintain its top quartile performance, just as the Principal product did allalong.
The fund does not take aggressive calls on either credit orduration – alpha source is solely stock selection in the equity allocation.
The fund is suitable for cautious investors wanting to diptheir toes into the equity space. It can equally be an SWP based retirementincome solution for retirees with adequate risk appetite.
A good primer on equity savings category.
