The Hindu Business Line : Franklin India Bluechip Fund: Invest

FRESH investments can be considered in Franklin India Bluechip Fund. The prevailing valuations suggest that it may be the right time to enter into actively managed diversified equity funds. And Franklin India Bluechip is one of the better performing funds in that category over a longer term.

There are, however, two points of caution. One, after the acquisition by Franklin Templeton India, the positioning of the fund and, therefore, its investment strategy could change. Officially, no changes have been announced. Yet, if the advertisement campaigns are to be taken seriously, there is a subtle shift in investment strategy. The impact of any such change cannot be evaluated now. However, given the track record and the fact that the fund manager is still the same, investors could stay invested in the fund.

Suitability: The risk involved in investing in the fund has been higher than in an index such as the Sensex. But, compared to a broader index such as S&P 500, the risk involved has been lower. Overall, the returns have been superior to these indices on a risk-adjusted basis too. This is, however, not a fund for the over-cautious equity investor. Though the fund invests in large-cap equity stocks, it had an aggressive growth bias in the past. The fund would suit an investor looking to beat the indices without increasing his risks significantly.

Performance: Over the past three years, the fund has generated returns that are much higher than that of the indices. Its performance stacks up well even against most of its peers. However, in recent months, the fund has trailed the S&P 500 and some of its prominent peers. This is mainly because of the exposure to stocks such as BPCL, HPCL, Reliance and MTNL. The long-term record, though, continues to be a relevant factor.

Portfolio allocation: The fund is almost fully invested, with the cash position reduced to 2 per cent at the end of October 2002. The top three sector exposures are banks, IT, and oil and gas. While the fund is underweight in IT stocks relative to their weight in the indices, it is overweight in banks and oil and gas.

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