• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Suresh Krishnamurthy

FRESH investments can be avoided in Franklin India Internet Opportunities Fund. Launched at the height of the bull-run in February 2000, its performance has been insipid. It has, however, recovered some of its losses in the present rally.

This could be an opportune time to exit partly from the scheme and switch to a diversified equity fund with a performance record. The rest of the holdings can be offloaded if the net asset value rises, especially because there are signs that the price rally could resume after a short correction.

The fund's future performance is heavily dependent on the fortunes of IT players, as a large proportion of assets are devoted to stocks in that sector. However, IT stocks are already ruling at substantially high valuation multiples.

For the fund to do well, the expected earnings growth rate in the IT industry has to rise from the present level of 20 per cent or lower. Considering a host of factors, this appears unlikely as of now, though the US economy appears to be recovering. In this context, paring exposures to the scheme may be prudent.

Performance: The present NAV of the scheme is about Rs 6, indicating that the fund has shed nearly 40 per cent since launch, though it did recover some the lost ground last year. In the initial couple of years, the fund, with its focus on IT sector stocks, consistently trailed Franklin India Infotech and other leading IT funds. Last year, however, it delivered higher returns than many of the IT sector funds.

Portfolio allocation: Franklin India Internet Opportunities Fund is a fairly large fund with assets under management of over Rs 200 crore.

It continues its focus on IT, which accounts for about 52 per cent of net assets. The fund has also invested in banks, telecom and oil and gas. The top stocks in the portfolio were Infosys, Bharti Tele-Ventures, HDFC Bank, Satyam Computers and HCL Technologies. These stocks accounted for 58 per cent of net assets.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Obstacles to good financial reporting

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line