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Shanthi Venkataraman

THE recent drop in market levels has trimmed the valuations of a range of mid-cap stocks to more reasonable levels. Mid-caps hold better potential for higher returns than large-cap stocks; but come with higher volatility and risks.

Investors comfortable with such risks may consider routing their investments through Franklin India Prima Fund — a mid-cap focussed fund with an impressive track record. Investments may, however, be made in a phased manner through a systematic investment plan to take advantage of any further decline in stock prices.

Suitability: The fund invests in mid-cap and small-cap stocks, which are more volatile than large-caps and subject to higher impact costs. Prima Fund thus carries a higher risk profile compared to other diversified equity funds that invest in large-caps or a mix of large-cap and small-cap stocks.

Investors with holdings in large-cap stocks can also consider adding the fund to their portfolio as a means of diversification. The fund has proved to be a good complement to funds such as Franklin India Bluechip.

Performance: Franklin India Pima Fund has a consistent track record, performing well in both bull and bear phases. In the past year, the fund has turned in a return of 95 per cent against the benchmark index, S&P CNX 500, which returned 71 per cent. It has also significantly outperformed the benchmark index over three-year and five-year periods.

Over the past year, the fund's performance has been better than that of its peers, Birla-Midcap and Sundaram Select Midcap. This is despite a fairly large asset base.

Portfolio overview: The portfolio is well-diversified. Between March and April 2004, the fund pared exposures to bank stocks and enhanced exposures to auto parts and textiles.

Reduced exposures to PSUs and policy-sensitive stocks may have given the fund a more defensive orientation. It is aggressively managed with a portfolio turnover of about 105 per cent by April 2004.

Fund facts: The fund was launched in December 1993. The minimum investment amount is Rs 5,000. The entry load is 2.25 per cent; there is no exit load. The fund was until recently managed solely by Mr K. N. Sivasubramanian. However, Mr Satish Ramanathan has been recently inducted as co-portfolio manager of the fund.

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