In the light of its recent strong performance and its established track record, Prima Plus is a good investment choice.
An investment can be considered in Franklin India Prima Plus, which figures among the top performers in the diversified equity fund category over a three-year and five-year period.
The fund has a large-cap bias, though it invests a small portion of its portfolio in mid-cap and small-cap stocks. Prima Plus has beaten its benchmark the S&P CNX 500 in each of the last five years. It has performed equally well against narrower benchmarks such as the BSE 200.
The fund’s performance has gathered momentum over the last two years in particular, where a focus on select large-cap stocks, such as Bharti Airtel, Kotak Mahindra Bank and Larsen & Toubro, and right sector choices such as media and banking have paid off.
In the light of its recent strong performance and its long established track record, Prima Plus may be a good fit for your portfolio. The portfolio is, however, actively churned, which points to more aggressive fund management, and investors could be exposed to periodic shocks in performance.
Performance: Prima Plus was one of the few funds that managed to outperform the Sensex in 2006, when the rally was led by a narrow set of stocks. Over the past year as well, the fund has delivered a return of 40 per cent, beating the Sensex and its benchmark index by about 10 percentage points. The fund figures in the top quartile of the performance rankings over a one-year period.
Tracking its monthly returns of the last five years reveals that Prima Plus has outperformed the CNX 500 about 60 per cent of the time.
In the last two years, its consistency in performance has improved, with Prima Plus beating the index in 17 out of 24 months. It has also protected investors fairly well from downside during this period, rarely falling more than the CNX 500 during downturns.
Portfolio overview: Prima Plus follows a diversified investment strategy, with exposures to stocks capped at about 5-6 per cent.
With an asset base of Rs 1,350 crore, the fund invests in a range of sectors, with banking, media and capital goods taking up a third of the portfolio. It also invests in a clutch of stocks within each sector rather than take a concentrated exposure to one or two stocks.
Interestingly, the fund is light on infrastructure/construction stocks, which have dominated most diversified fund portfolios in recent years. Instead, it is more focused on sectors that will benefit from consumption.
The fund has a modest exposure to mid-cap stocks. Stocks with a market capitalisation of less than Rs 5,000 crore, account for barely 15 per cent of the portfolio. The strong large-cap tilt has helped performance in the narrow rally of the last two years.
Mid-cap picks in the media sector such as Television Eighteen, TV Today and NDTV have helped boost returns.
Fund facts: Franklin India Prima Plus was launched in 1994. The fund is co-managed by Mr Sukumar Rajah and Mr Anand Radhakrishnan.