An investment can be considered in Franklin India Bluechip Fund (FIBF). There are only a handful of funds that have weathered bear phases well, and FIBF is one of them.
Investors with a horizon of three years and more could consider this fund. An impressive track record since its launch 13 years ago is a key factor underpinning this view.
The fund's strategy of investing primarily in large-caps should act as a cushion against choppy markets, considering the inherently lower volatility of such stocks.
The recent sharp fall in the key indices should serve as a good entry point into the fund.
In the year up to April, the fund delivered a return of 97 per cent, which is comparable with returns delivered by other diversified funds such as Magnum Equity Fund, HSBC Equity and HDFC Top200.
The fund has also outperformed its benchmark (Sensex) by a few percentage points. However, over a five-year period, the degree of outperformance has been significantly higher. The fund has the highest exposure to software and is relatively underweight on capital goods and metals.
Given that the decline in stocks from the last two sectors has been steeper than the benchmark over the past month, the stock selection should enable it to weather the current rough phase in the market.
The top ten holdings account for about 55 per cent of the allocation. On an average, the fund holds 30 stocks in its portfolio.
FIBF adopts a `buy-and-hold' strategy and has held a few stocks such as ITC, SBI, Maruti, Grasim for more than a year. The top three sectors account for 40 per cent of the allocation.
Considering the choppy market conditions, investors should buy into this fund through the SIP route, as opposed to parking a large amount at one go.
Fund facts: FIBF was launched in October 1993 as a close-ended fund. The fund turned open-ended since January 1997. The minimum investment amount is Rs 5,000.
The fund, which charges an entry load of 2.25 per cent and no exit load, is managed by Mr K. N. Siva Subramanian.