Sundaram Multi-Factor Fund NFO Opens July 2, Targets Growth Using Scientific Multi-Factor Model

The NFO is an open-ended thematic equity scheme designed to deliver long-term capital growth by investing in companies selected using a robust multi-factor model. This quantitative model combines well-established factors like quality, growth, value, and momentum to identify high-potential stocks. By blending these factors, the fund aims to offer consistent returns across different market cycles while effectively managing risk. The portfolio will be primarily diversified across large and mid-cap companies within the top 250 listed firms. Though there is no guarantee of returns, this data-driven strategy seeks to reduce human biases in stock selection, making it suitable for investors seeking a scientific, disciplined equity investment approach.

Key Features of Sundaram Multi-Factor Fund

• Opening Date: July 2, 2025
• Closing Date: July 16, 2025
• Exit Load: 1% if redeemed within 365 days from allotment. Nil after 365 days
• Minimum Investment Amount: ₹100 and in multiples of ₹1 thereafter
• Fund manager: Rohit Seksaria, S. Bharath, Dwijendra Srivastava & Sandeep Agarwal

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Objective of Sundaram Multi-Factor Fund 

The primary objective of the Sundaram Multi-Factor Fund - Direct (G) is to achieve long-term capital growth by investing in equity and equity-related instruments selected based on a proprietary multi-factor model. The scheme does not guarantee returns or capital protection.

Investment Strategy of Sundaram Multi-Factor Fund

• Follows a systematic, quantitative, multi-factor model for stock selection.
• Factors include quality, growth, value, and momentum.
• Targets the top 250 listed companies, blending large and mid-cap exposure.
• The proprietary model determines factor allocations based on prevailing market conditions.
• Stocks are ranked using metrics like RoE, earnings growth, price momentum, and valuation.
• Portfolio turnover may be higher to adapt to market cycles and updated factor rankings.
• May use derivatives for hedging and portfolio balancing as per SEBI guidelines.

Risks Associated with Sundaram Multi-Factor Fund

• Thematic concentration risk due to a focus on multi-factor investing.
• Model risk, as historical data-based models may not work effectively in all market conditions.
• Equity market risk, including price volatility, liquidity issues, and settlement delays.
• Cycles of underperformance in certain factors may affect short-term returns.
• The debt portion is subject to interest rate, credit, and reinvestment risks.
• Use of derivatives adds leverage and execution risks.
• Liquidity risk for unlisted or illiquid securities.
• Market impact risk due to large model-based trades.

Risk Mitigation Strategy by Sundaram Multi-Factor Fund

The NFO incorporates a structured risk management framework to address various market and model risks. The portfolio is regularly monitored to maintain an even factor allocation in normal market conditions.  In volatile periods, the Internal Investment Committee may approve differential factor weightings based on quantitative insights. 

Liquidity is managed by investing predominantly in actively traded securities, while the debt portion is restricted to short-term instruments to reduce interest rate and credit risks. 

The Sundaram Multi-Factor Fund - Direct (G) avoids excessive exposure to unlisted or illiquid stocks. All derivative exposures are within SEBI-prescribed limits and actively monitored to ensure alignment with the fund’s objective.

What Type of Investor Should Invest in Sundaram Multi-Factor Fund?

• Investors with a long-term wealth creation goal.
• Those comfortable with market volatility and thematic investing.
• Individuals seeking a scientific, model-based equity approach.
• Investors prefer diversified exposure to large and mid-cap equities.
• Suitable for investors aware of factor-based investing risks and potential cycles of underperformance.
• Not recommended for those seeking guaranteed or fixed returns.