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S.Vaidya Nathan

INVESTORS in Franklin India Prima Plus, especially those who have opted for the Growth Plan, can book profits by selling a part of their holdings (50-60 per cent), especially on strength in the broad market.

This would enable them to cash in on the NAV appreciation of about 85 per cent over the past year and 25 per cent over the past three months. The concentrated nature of the portfolio may limit the scope for gains.

A part of the holdings can be retained given its good track record over the long term — now spanning nine years. But Prima Plus has not been as impressive in the bullish phase in stocks over the past six months as one might have expected, given its track record.

It has outperformed the broad market by about 10 percentage points. But it trails a host of peer funds with diversified portfolios. This is, particularly, the case over the past three months. During this period, it has trailed even the broad market by about five percentage points. The holdings of 21 per cent of net assets in banking sector stocks, 16 per cent in information technology stocks and the modest exposures to stocks in the commodity and engineering sectors appear to have acted as a drag on performance.

Exposures to banking and IT were stepped up in October. The focus on just three banking stocks — ICICI Bank, HDFC Bank and State Bank of India — is a cause for concern.

The second- and third-rung banking stocks may not offer the quantum of gains witnessed in 2003. But the stock prices of the bigwigs may have limited room on the upside, unless there is sharp bullish trend in the broad market.

Much the same applies some of its holdings such as Digital GlobalSoft and Infosys in the IT sector.

Suitability: Prima Plus is a diversified fund which invests in a mix of large-cap and mid-cap stocks. The risks are slightly higher than the typical diversified fund, such as Bluechip, which focusses on large-cap stocks.

The move to step up holdings in the IT and banking sector to close to 40 per cent of net assets has enhanced the risk level.

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