Sundaram MF launches Sundaram Services Fund

Sundaram Mutual Fund has launched a new fund offer (NFO) called Sundaram Services Fund. The open-ended equity mutual fund is open for subscription and closes on September 12. The minimum investment amount is Rs.5,000 and the fund will be benchmarked against the S&P BSE 200.

“India is among the fastest growing service sectors, led by rising purchasing power, fast growth in social mobility and increasing urbanization trends,” says Sunil Subramaniam, Managing Director, Sundaram Mutual Fund.

Services have been a structural theme in Asia’s third-biggest economy, with the India Services Index delivering 5x returns in the last decade. Globally, consumer service as a theme has performed well.

The indices have outperformed benchmarks over time. For instance, the US Consumer Service Index has delivered a CAGR of 15.4% vs 11.5% for S&P 500. The MSCI Japan Consumer Service Index has delivered a CAGR of 17.8% vs 11.5% for Nikkei.

The fund will follow a multi-cap strategy with a portfolio of 40 companies across large, mid and small cap companies, with the top 10 stocks accounting for about 40% of the portfolio. It can invest in financial services (retail lenders, wealth management, insurance), healthcare services & fitness firms (also hospitals, diagnostic chains), trade, tourism & hospitality companies (retail, hotels & restaurant, tourism), transportation (aviation, logistics), business services (BPM service, staffing etc.) and other service providers like media, entertainment & gaming, telecom/data provider, and online services.

The fund will have 193 stocks as its investible universe, with the fund manager expecting new companies to be added to the list through subsequent IPOs. In the large-cap space, there are 31 companies with an aggregate market cap of more than Rs.30 lakh crore.