Franklin India Opportunities generally has a portfolio tilted towards large-caps, holding 75-90 per cent in such stocks across market cycles. But an unwieldy portfolio, some poor sector moves and limited participation in rallies have resulted in a lacklustre performance. Unit holders can switch their investments to Franklin Prima Plus, a more consistent performer.

Prima Plus too invests predominantly in large-cap stocks, with limited mid/small cap exposure, but has a much better long-term track record.

Uninspiring performance

The fund has historically seen a high churn in its portfolio. As of end-May 2013, the portfolio turnover stands at 207.75 per cent, suggesting that the fund desires to cash in on the flavour of the season. While this strategy may be in tune with the ‘opportunities’ theme, the frequent shuffle has not helped the fund generate market-beating returns.

Over one-, three- and five-year timeframes, the fund has either trailed or at best equalled the returns generated by its benchmark, the BSE 200 index. Its compounded annual return of a modest 5.7 per cent in the last five years places it in the bottom quartile of diversified funds, classified by returns.

In line with the strategy of the fund house, Franklin Opportunities remains more or less fully invested in the markets (equity exposure of 90 per cent and above) at all times.

However, it failed to fully participate in market rallies of 2009-2010 and 2012. During these periods, the fund underperformed both its benchmark and the broader markets represented by the BSE 500 index.

Limited holdings in top performing sectors have also marred the fund’s performance over these years. For instance, Auto, a top performer in 2009 constituted only about 5-7 per cent of the portfolio then. The fund was also late to step up on Pharma stocks, another winner in the last 2-3 years. It held less than 5 per cent in this space in 2010-2011. It, however, did well to gradually heighten its consumer non-durables holdings till mid-2012.

Considering the expanding valuations and slowing consumption, it has pruned its exposures here since then.

Portfolio

Although the fund takes concentrated bets of 5-7 per cent in select stocks, it has held up to 70 stocks in the past, making for a very diffused portfolio. The number has been brought down to a reasonable 35-40 in recent months. The top sector bets are banks and petroleum products currently.

While it exited gas, hotels and non-ferrous metals in the last one year, it has entered construction and media and entertainment. Marico, JK Cements, Federal Bank and IndusInd Bank are recent entrants.

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