NFO Closes on 06 December 2010. It is a hybrid scheme that will have a mix of debt and equity with capital guranteed at maturity.

1. New Fund Update: Sundaram Capital Protection Oriented Fund Series 2 – 3 years
Author: iFAST Research Team
Sundaram Capital Protection Oriented Fund is a hybrid mutual fund scheme that will have a mix of debt
and equity. The debt portion of the fund will be managed passively and would invest over 80% of corpus
in AAA rated corporate paper or government securities and hold them till maturity so that with interest,
the fund grows back to principal investment. And rest of the money, around 20%, would be invested in
equities. The equity portion will be managed with bottom-up stock picking approach and the fund would
invest in stocks forming part of S&P CNX 500 index. The portfolio will be a multi-cap equity portfolio
with a mid and small-cap emphasis.
Why an investor should look to invest in this Fund?
• The fund provides a good blend of equity and fixed income investments with capital guaranteed
at maturity
• The fund is rated AAA (structured obligation) by CRISIL which indicates highest degree of
certainty regarding timely payment of face value of the investment
• The fund is more tax efficient as it would be taxed as a debt mutual fund i.e., 10% (without
indexation) and 20% (with indexation) whilst marginal tax bracket is applicable to fixed deposits
which could be as high as 30%.
Past performance of some of the Matured Capital Guaranteed schemes:
Scheme Name Matured Date Return- Since Inception (CAGR)
Birla SL CPO-3Yrs(G) 03-Aug-2010 5.42
DWS Cap Prot Oriented(G) 01-Jun-2010 6.63
FT India CPO-3 Yrs(G) 14-Jun-2010 7.48
Sundaram BNP CPO-3Yrs(G) 23-Aug-2010 8.90
UTI CPO-1- 3 Yrs(G) 22-Feb-2010 7.25
Average - CRISIL MIP Blended Index 7.62
Source: ACEMF,iFAST Compilation
*CRISIL MIP Blended Index performance is taken based on the average performance of the index during the tenure
of each of the above mentioned scheme
Though capital guaranteed scheme as an investment class has not outperformed the benchmark, CRISIL
MIP Blended Index, Sundaram BNP CPO Series 1 has outperformed the benchmark as well the category
average. Capital Guaranteed scheme also comes with an advantage of guaranteeing the capital which is
not available in MIP.

2. Conclusion
In the current scenario, on account of six continuous rate hikes done by RBI and tight liquidity condition,
yield on short-term debt papers is at attractive levels. In addition, on equity side, India is world’s second
fastest growing economy and is expected to grow over 8% for at least a decade. With positive
demographic and strong consumption story, the equity markets are well positioned as an attractive
investment opportunity for long term. Hence to take advantage of current investment opportunities
available in debt and equity markets, investor having low risk appetite can consider investing a portion
of their portfolio in a capital protection fund.
Conservative or moderately conservative investor who is looking to invest in fixed income instrument,
with a possibility of enhancing return through limited allocation to equity, can look at investing in this
fund. Also, individual in the highest tax bracket and likely to invest in fixed deposits can park small
portion in this fund to enhance post tax return.
Sundaram Capital Protection Oriented Series II Fund has high credit rating and the performance of the
earlier fund issued by the fund house, Capital Protection Oriented Fund – Series 1, has been good too.
The fund house has around 78% of their AUM in equity schemes and the performance of their equity
schemes has been good over long term. Hence, considering the current economic scenario as well as the
pedigree of the fund house, this fund seems to be a promising bet.
Basic details of the fund

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advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the
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Opinions expressed herein are subject to change without notice. Please read our disclaimer on the website.Please read our
disclaimer in the website. Risk Factors: Mutual funds, like securities investments, are subject to market risks and there is no
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