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Change of guard at Franklin Templeton India

Aarati Krishnan
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K.N. Sivasubramanian, Chief Investment Officer - Franklin Equity India.
Business Line K.N. Sivasubramanian, Chief Investment Officer - Franklin Equity India.

Anand Radhakrishnan, Head — Equity, to take over reins as KN Sivasubramanian will retire as CIO this month-end

KN Sivasubramanian, one of the most senior portfolio managers in the country, is planning to take early retirement at the age of 50, after a 20-year stint in fund management. He will be stepping down as Chief Investment Officer — Franklin India Equity at Franklin Templeton Investments at the end of this month.

Anand Radhakrishnan, Head of Equity at the same fund house, will be taking over his role. He will oversee about ₹13,500-crore in domestic equity assets and advise over $1 billion in overseas money.

All money in Franklin

Asked what he planned to do next, Sivasubramanian said he was definitely not going to take up any equity-related work. “I would like to spend more time with my family and catch up on my reading. It will be good not to have any time-table. When you have someone competent managing your money, why reinvent the wheel?”

All of his own money, he explained, was invested in the Franklin Templeton funds and would remain there.

Sivasubramanian was part of the original fund management team at Kothari Pioneer Mutual Fund, India’s first private sector mutual fund. The house was taken over by the US-based Franklin Templeton group 10 years ago and Sivasubramanian stayed on.

Franklin Templeton’s equity products acquired an impressive performance record under Sivasubramanian’s stewardship. Franklin India Bluechip Fund, which recently celebrated its twentieth anniversary, multiplied its initial investors’ money 53 times, while Franklin India Prima Fund generated an over 30-fold gain on every rupee invested in 1993.

Sivasubramanian’s investment style relied on compact portfolios of 30-50 stocks, made up of high growth companies bought at reasonable valuations. He carries a reputation in the industry for being ultra-strict on governance and quality issues while selecting stocks. His decision to stay away from realty and construction stocks in the 2006-07 boom, for instance, paid off big for the fund house and helped it avoid significant reversals during the 2008 crash.

In fact, asked what was the most challenging phase of his career, he said: “Definitely the big bull market of 2006-07. It is difficult to keep your head in a bull market because the way you evaluate companies doesn’t hold good. Every stock is moving. Bear markets are far easier because everybody focuses on the conventional metrics.”

‘Bottom-up style to remain’

So, what changes should investors expect in Franklin Templeton’s equity funds after the change of guard in March? CIO-elect Anand Radhakrishnan said Siva’s bottom-up style would be carried forward and that there were no plans to change the basic mandates of the funds. Equity funds would remain fully invested and not try to time the markets by holding cash.

“I used to be a 50:50 kind of manager when I joined this firm. I used to focus a lot on macros and pay less attention to company-specific details. But over the years, I have found more and more merit in the approach of this firm - understanding sectors and companies better, before selecting a stock. As a result, I have adjusted my investment style over the years. I have found that over-emphasis on macros makes you myopic in stock picking”, he adds.

Smooth takeover

Both managers explained that internal preparations for Sivasubramanian’s exit had begun many months ago. The equity funds where he was the lead portfolio manager have been gradually transitioned to other senior members of the team, to ensure a smooth takeover.

“It will be hard to match the incredible passion, enthusiasm and knowledge that Siva brought to the job. But Sukumar (Rajah) will still be guiding us, in a supervisory role. We’ve also tried to assimilate whatever we could while working with Siva over the last many years.

“The learnings are built into our process. We have a large talent pool and a strong and cohesive research team. We hope to remain one of the better-run investment firms in the country,” Radhakrishnan said.

(This article was published on February 3, 2014)
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