Sundaram Small Cap Fund Direct Plan Payout of Income Distribution cum Capital Withdrawal INF903J01NI3

Sundaram Small Cap earns a Low Process Pillar rating.

The main driver of the rating is the fund's unimpressive 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 subpar risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.5 stars, also weakens the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year risk-adjusted success ratio of 36% further weakens 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 market capitalization, it is on par with peers. Examining additional factor exposure, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, 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 also has had lower yield exposure than peers over these years; its portfolio has held fewer stocks with high dividend or buyback yields. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In the most recent month, however, the fund's Yield exposure was in line with the Morningstar Category average. Given the high trading volume of holdings, this fund also tilts toward liquid assets. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In this month, the strategy also had more exposure to the Liquidity 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 4.1 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared with category peers are basic materials and energy, with basic materials underweighting the average portfolio by 3.1 percentage points of assets and energy similar to the average. The strategy owns 81 securities and is relatively top-heavy. Of the strategy's assets, 23.8% are concentrated within the top 10 holdings, as opposed to the typical peer's 13.7%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 49% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.