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Suresh Parthasarathy

Templeton India Pension Plan is an open-ended debt-oriented balanced fund with maximum allocation of 40 per cent to equity, and the rest in debt. The fund marginally beat the category average over a five-year time-frame and outpaced the benchmark by two percentage points. Its return since inception (1997), higher allocation to debt and consistent performance over market cycles augurs well for an investment.

Features: The fund’s objective is to provide regular income under the dividend option (the fund has consistently declared dividends). Investors can choose the lump-sum or systematic investment plan but need to remain locked in for three years.

Redemptions can be made in full at the existing NAV rate on attainment of age 58. Premature withdrawal is subject to a charge on the NAV. Investment is eligible for tax deduction under Section 80C up to Rs 1 lakh. The fund is subject to long-term capital gains; indexation benefit may, however, be availed.

Suitability: The fund suits investors looking to build a corpus for their retirement. As debt schemes such as public provident fund (PPF) have an investment cap of Rs 70,000 per year, investors can consider exposure to this fund to meet the rest of their investment-cum-tax benefit needs.

As the exposure to equity is limited, investors may have to start investing in the early part of their earnings life cycle to build a sizeable corpus. With Government withdrawing the commutation on pension under the Employees Pension Scheme, this fund might provide some immediate cash flow on retirement.

Performance: The fund has declined by 21 per cent over a one-year period and trailed the benchmark (40 per cent of S&P CNX 500 and 60 per cent of Crisil Composite Bond Fund Index) by few percentage points. But it has trailed the UTI Mahila Unit Scheme, which has a similar investment strategy, by 12 percentage points.

Portfolio Overview: The fund has a well diversified equity portfolio of predominantly large-caps. As of September, 66 per cent of the assets were invested in debt and AAA rated securities accounted for 90 per cent of the debt. The average portfolio maturity period is 8.89 years and yield on security is 11.03 per cent. The fund is managed by Mr Anand Radhakrishnan along with Mr Sachin Padwal-Desai and Mr Vivek Ahuja.

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