Sundaram Alternates S.E.L.F

Investment Strategy

Sundaram PMS’s SELF (Sundaram Emerging Leadership Fund) is a mid-cap oriented strategy, investing primarily in companies with market capitalisation below ₹50,000 crore, with a moderately concentrated portfolio of around 20–25 stocks. The strategy is designed to capture businesses with the potential to evolve from small-cap to mid-cap and eventually into large-cap leaders over time. Portfolio construction is biased towards asset-light companies with strong cash flow generation, while maintaining sectoral flexibility within a defined thematic framework.

Focus Areas and Themes

The strategy maintains an explicit thematic emphasis on select sectors where the investment team believes long-term compounding opportunities are structurally favourable, including consumer discretionary, financial services, chemicals, and cement.

3Q Stock Selection Framework

Stock selection under SELF follows Sundaram’s established “3Q” framework, combining assessments of business quality, financial strength, and management capability to identify long-duration growth opportunities.

• Quality of Business: Scalable, self-sustaining business models with clear differentiation and competitive advantages.
• Quality of Financials: Ability to double earnings over a 4–5 year period, minimum ROIC of 15%, operating cash flow to EBITDA above 50%, and conservative balance sheets with debt-to-equity below 0.5x.
• Quality of Management: Evaluation of management track record, long-term vision, sustainability of growth, capital allocation discipline, and adherence to sound corporate governance practices.

Small and Mid-Cap Specialisation

The strategy leverages Sundaram’s long-standing expertise and regional network, particularly in South India, which has historically supported access to emerging businesses and management teams. The longevity of the SELF strategy is a key differentiator, with a track record extending close to a decade, at a time when relatively few mid-cap focused PMS strategies have demonstrated comparable operating history.

PMS Background

Sundaram Alternates PMS is part of Sundaram AMC, a mid-sized mutual fund house with a long operating history, having commenced operations in 1996. While smaller in scale compared to large peers such as ICICI, Birla, or Axis, Sundaram has historically built a strong reputation in small and mid-cap investing, particularly with deep familiarity and access to South Indian businesses. This legacy of bottom-up stock selection provides a credible foundation for its alternatives and PMS platform. However, the PMS exhibits several characteristics typical of AMC-driven PMS offerings, including limited structural separation from the broader AMC, relatively higher investment team churn, and constrained alignment due to the absence of meaningful equity ownership by key decision-makers. The current CIO, Madanagopal, has a relatively short tenure of around two years, reinforcing concerns around continuity, long-term accountability, and depth of skin-in-the-game at the PMS level.

PMS Investment Philosophy

Sundaram Alternates PMS does not articulate a sharply defined or differentiated investment philosophy at the PMS level. Instead, its approach appears to be an extension of the parent AMC’s long-standing strength in identifying opportunities within the small and mid-cap segment. The platform leverages Sundaram’s regional networks and on-ground familiarity, particularly in South India, which has historically enabled access to management teams and niche businesses that are less institutionally crowded.

Suitable For

Investors seeking exposure to a long-established investment institution with demonstrated experience in small and mid-cap stock selection, and who are comfortable with an AMC-led PMS structure despite potential limitations around team stability, alignment, and philosophy clarity.