Mutual Funds

Consistent performer: Franklin India Prima Plus: Invest

Suresh Parthasarathy | Updated on March 05, 2011

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The fund has proved its mettle across market cycles.

Are you looking for a fund with conservative approach, steady returns and conviction to stay invested in equity irrespective of market conditions? Franklin India Prima Plus is one such option. The fund proved its mettle across market cycles.

Over three- and five-year time-frames it has clocked a compounded annualised return of four and 14 per cent, respectively, and outpaced its benchmark S&P CNX 500 by more than five percentage points. The fund primarily invests in large-cap stocks with market capitalisation above Rs 7,500 crore but also invests close to 30 per cent of assets in mid- and small-caps.

This fund, which holds a long-term track record, has in general stayed away from the momentum stocks and volatile sectors even though such staying away impacted its short-term performance. For instance, during the market rally in 2009, despite the fund being fully invested in equity, it failed to participate in the market rally mainly on account of its exposure to mid and small-cap stocks.

Despite the blip in short-term performance, the mid-cap stock rally that followed later ensured that the fund caught up on long-term performance. That the fund managed to contain the downside during the market corrections despite holding mid and small-cap stocks is noteworthy.

Performance: Over the last one a year the fund delivered absolute return of nine per cent and bettered its benchmark by seven percentage points. While returns through SIPs were superior compared with benchmark, the strategy still lagged lump sum returns.

Portfolio strategy: The fund has a well diversified portfolio of 51 stocks. The top ten stocks in the portfolio accounted for 43 per cent of the assets. The fund appears to have taken a contrarian bet on the underperforming telecom sector. On the other hand, it placed lower weights on the consumer non-durables and pharma sectors. This could have partly lowered its one-year return. The fund is jointly managed by Mr Sukumar Rajah and Mr Anand Radhakrishnan.

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Published on March 05, 2011
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