The Hindu Business Line : Templeton MF to consolidate product portfolio

TEMPLETON Mutual Fund has proposed to consolidate its product portfolio - a move that will bring its Fund of Funds (FoF) to the fore. It will merge two of its schemes, FT India Asset Allocation Fund and FT India PE Ratio Fund, into FT India Life Stage Fund of Funds and FT India Dynamic PE Ratio Fund of Funds, respectively.

Each of the five plans offered under the asset allocation product will move into a matching option worked out by the Life Stage FoF. The `pure growth plan' of the former, aimed at investors willing to take relatively higher risks, will be merged into the `20s plan' devised by the latter.

The 20s plan, as the name suggests, is meant for younger investors who wish to take greater exposure to riskier securities.

The steady growth plan, too, will be similarly merged. The balanced growth, conservative growth and inflation hedge plans will be merged with the 30s plan, 40s plan and 50s plan respectively.

The portfolios of the last three are laden with debt, unlike the pure growth and steady growth alternatives that focus more on equities.

The two equity-oriented plans have provided decent returns since inception in February 2002 - 17.7 per cent and 16.6 per cent, respectively. In comparison, the balanced growth, conservative growth and inflation hedge plans have given 14.7 per cent, 12.6 per cent and 8.3 per cent, respectively.

FT India PE Ratio Fund, which will move into FT India Dynamic PE Ratio FoF, has delivered 13.7 per cent since launch (February 2000).

This scheme uses a major indicator - PE ratio of the market as represented by the Nifty - to signal the state of the stock market.

The investment theory is simple: When the market is in a lower PE ratio band, the scheme will have a higher exposure to equities.

Also, when the PE ratio band is at a higher level, it will scale down the exposure to equities.

The growth, dividend and dividend reinvestment choices under each plan (of the merging fund) will be merged into the equivalent options, Templeton MF announced.

It had also announced that the record date for the mergers had been set for July 16.

It also pointed out that the market regulator had cleared the proposal. An exit option has been provided to investors, which needs to be exercised by July 16.

The no-load option, incidentally, will be available to unit holders who have invested before June 16.