The Hindu Business Line : Templeton India Equity: Invest

Templeton India Equity Income Fund (TEIF) appears to be a good option for investors looking to diversify their equity portfolio. A global investment universe and value investing strategy are two key features of this fund that may provide some cushion to any decline that could possibly follow the recent relentless rally.

With a return of 52 per cent over the past one year, TEIF has outperformed its benchmark BSE 200’s return of 48 per cent. The performance since its inception also fares well against the benchmark. However, given the narrow rally of stocks in the domestic market over the past few months, the fund has lagged its benchmark in recent times. This appears to be the scenario with a good number of local diversified funds as well.

TEIF seeks to invest in stocks that are trading at a discount to their intrinsic value. The fund seeks to follow this strategy by identifying stocks with potential for high dividend yield in the domestic and foreign markets. This means that TEIF may not necessarily be among the top performing funds in the Indian context. The fund may, however, provide a diversified portfolio of stocks that provide stability during volatile market phases, given its international exposure and value investing style.

TEIF’s foreign holdings at 30 per cent are mostly across emerging markets such as Turkey, Korea, Taiwan and Mexico, although its mandate allows a larger investment universe. This could be due to the presence of several stocks with attractive dividend yields in these markets. Stocks in the fund’s portfolio do appear to have better yields than what is typically available in the Indian market. That the fund is managed by Mr J. Mark Mobius, who also heads Templeton’s Emerging Markets Group, could also explain this bias.

The fund has a well-diversified portfolio, which now displays a preference for commodities (ferrous metals), energy, technology and financial services. The first two sectors have been witnessing heightened interest globally.

Given the fund’s short track record of less than two years, TEIF should be a diversification option only. The NAV per unit under the growth scheme is Rs 16.16.

Vidya Bala

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