The Hindu Business Line : Franklin India High Growth Fund: Hold

Investors can retain their units in Franklin India High Growth Fund, an open-ended diversified scheme. The fund’s objective is to seek high growth by focussing on companies or sectors with high growth rates or potential.

It was launched in July last year just before the start of a strong rally, which eventually lad the market to a life-time high. Given its short track record, it is advisable for investors to wait and watch performance before committing any fresh investment.

Suitability: Growth stocks have a potential for higher returns and equally carry a similar risk. In just one year the fund took concentrated exposure to sectors and stepped up the risk profile.

To achieve higher returns, the fund had a sizable asset allocation to mid-cap stocks. Going by the strategy, the fund appears suitable for investors willing to trade off high risk for higher return.

Performance: The fund, over a one year period, generated a negative return of 10 per cent and trailed the benchmark S&P CNX 500 by 9 percentage points. Over the six-month period, it suffered a huge loss, due to the presence of midcap in the portfolio.

Since the market is undergoing a highly volatile phase, the presence of midcap will put pressure on returns even if there is a pull back in the market. This is already visible in the fund’s one month return. On a monthly rolling return basis for the past one year, the fund has trailed broader benchmark by more than 70 per cent.

Portfolio overview: Franklin India High Growth takes concentrated bet on sectors and stocks. In the latest portfolio, the top ten stocks account for 51 per cent of assets and top three sectors capital goods, software and telecommunication have cornered 42 per cent of the assets.

As part of diversification, the fund has spread assets across 19 sectors. It sold select stocks such as BHEL, CESC, IDFC and India Infoline at the start of correction and acquired the same at lower levels.

The fund’s asset has lost 42 per cent in the first six months and as per the June portfolio it stood at Rs 1,153 crore.

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