The Hindu Business Line : Franklin India Taxshield: Invest

AN INVESTMENT can be considered in Franklin India Taxshield, which has, like most tax-saving funds, turned in a good performance over a five- year period.

While it is not the top performing fund in this category, you may consider including it in your portfolio for the following reasons: It has a large-cap bias, which could explain why its returns are not as spectacular as the top performing tax-saving funds that have surfed the wave in mid-cap stocks.

The large-cap tilt also makes it suited for conservative investors who are beginning to look at equity for tax-saving options. Its relatively superior performance during correction phases is another point in its favour. Investments may be considered in phases to avoid exposing a large sum to the volatile markets, especially considering the three-year lock-in period.

Performance: Since its launch in 1999, the fund has delivered a steady performance, consistently beating the broad-based S&P CNX 500, its benchmark. In the bear phases of 2000 and 2001, it outperformed most of its peers — despite its significant exposure to technology stocks — thanks to a liberal dividend payout policy.

In the bull phase starting from mid-2003, it has delivered returns higher than that of the average diversified equity fund.

Portfolio overview: The portfolio has undergone a few changes compared to a year ago. It has now acquired a more diversified hue with 45 stocks packed into the Rs 175-crore portfolio. The fund has ensured that holdings in any single stock do not exceed more than about 6 per cent.

The fund also had a tendency of taking concentrated exposures to sectors. In contrast, it now takes a measured approach to investing in sectors. The top three sectors as of September — finance, software and metals — accounted for less than 30 per cent of overall assets.

About 25 per cent of the fund's assets are invested in stocks with a market capitalisation of less than Rs 2,000 crore. A few of the popular mid-cap picks, such as, Madras Cements, Monsanto, Marico and NDTV, figure in its portfolio.

JK Paper, Clariant and Maharashtra Scooters are offbeat picks.

: Franklin India Taxshield was launched in 1999. Investments in the fund qualify for tax-benefits under Sec 80-C. The minimum investment is Rs 500.

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