The Hindu Business Line : Franklin India Opportunities: Hold

Investors can retain their units of Franklin India Opportunities Fund based on the fund’s performance over a three-year period. The fund was launched in 2000 as a thematic fund (Franklin Internet Opportunities) but was restructured into a diversified fund in 2004. The strategy is to invest in companies that are globally competitive with high growth potential. The fund invests across market capitalisations, but is biased towards large-cap (over Rs 7,000 crore market capitalisation) stocks.

The fund has the tendency to take concentrated, stock-specific exposure, at times investing as much as 10 per cent of the portfolio in individual stocks.

The FIO has a relatively higher portfolio turnover among the Franklin Templeton funds, indicating that the fund takes an active approach on its stock and sector exposures. The fund may, therefore, be suitable for investors with a high-risk appetite looking for higher-than-average returns.

Performance: The fund’s NAV has lost 55 per cent in the last one year and has largely tracked the returns of its benchmark - BSE 100 over the same timeframe. Even over a three-year timeframe the FIO returns look similar to that of its benchmark. In July, the fund witnessed a change in manager and over the next two months it added 31 stocks to its portfolio. The fund portfolio has expanded from a compact 32 to 58 stocks now. The fund moved from a concentrated portfolio to more diversified portfolio, but prefers to take concentrated exposure to specific stocks.

With change in strategy, the fund was able to contain the downside better than the benchmark over the past three months. However, it may be too early to tell if this investment strategy will click over the long run. Hence, it’s advisable to watch the performance a little longer before making any fresh investment.

Portfolio overview: The top-three preferred sectors over the past few months continued to be banks, petroleum and capital goods. The fund has added higher exposures to consumer non-durables and pharmaceuticals, making for a more defensive exposure.

The fund rejigged its portfolio by reducing the holdings in stocks such as ABB, Siemens, BHEL, Idea Cellular and Reliance Communication and instead increased holdings in HUL and Colgate Palmolive. With the substantial change in portfolio, the beta of the fund continues to be close to one, suggesting potential to participate in a market recovery.

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