The Hindu Business Line : Franklin Prima: Invest

It focuses on quality stocks in the mid-cap space and is appropriate for investors targeting above-market returns over 5 or 10 years. Consistent good performance has placed the fund at the top of the equity fund rankings for a five-year period.

Every Rs 100 invested in this fund would have grown eightfold to Rs 808 over the last five years.

A sharp bout of re-rating in the mid-cap space having been completed, returns of this order may be difficult to manage. But the focus on mid-cap stocks may still help Prima deliver better returns than the average diversified equity fund.

Portfolio: Though positioned as a mid-cap fund, Prima's portfolio straddles a fairly wide range of stocks in terms of market capitalisation.

About two-thirds of the portfolio comprises stocks falling in the Rs 1,000-5,000 crore market-cap band. However, about 20 per cent of the assets are also invested in stocks below the Rs 1,000-crore threshold.

The fund also has an allocation to large-cap stocks, including MICO, IDFC, i-flex and GE Shipping.

As a result of this mix, the average market cap of the Prima Fund's portfolio, at about Rs 2,300 crore, is higher than that for most other mid-cap funds.

This could temper the fund's returns in comparison to other mid-cap funds that focus on smaller stocks. The fund's portfolio mix could be the result of its swelling size. At Rs 1,800 crore, the fund remains one of the biggest equity funds in operation.

The fund has managed its size by spreading its portfolio over a larger number of stocks and by allocating a portion of it to stocks that have attained large-cap status.

The positive offshoot of Prima's layered portfolio is that it could result in lower volatility of returns, a common risk with mid-cap funds. The fund survived the recent meltdown in mid-cap stocks well, registering a 9 per cent decline in its NAV during the October fall, while indices declined by 11 per cent.

In terms of stock choices, the Prima Fund continues to feature offbeat sectors and stocks.

Textiles, Indian pharma and auto ancillaries were the top sector choices in end October. Stocks from fertilisers and pesticides have been inducted in recent months.

Fund facts: Franklin India Prima Fund made its debut in 1993. The fund is managed by K.N. Siva Subramanian.

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