Conservative investors can buy the units of Franklin India Prima Plus (Prima Plus). The fund exhibits an ability to contain losses during market downturns as well as provide reasonable upside in rallies. Prima Plus has a long track-record of over 15 years and has consistently beaten its benchmark. Over one-, three- and five-year timeframes, the fund made a compounded annual return of 8.8, 8.7 and 6.8 per cent, respectively, outpacing its benchmark by about two to six percentage points in these periods.

Its 26 per cent compounded annual return in the last ten years places it in the top quartile of diversified equity funds, categorised by returns.

Suitability

Prima Plus has a mandate to invest primarily in large-cap stocks, with a marginal mid/small-cap exposure. This strategy comes in handy during market corrections. For example, during the meltdown between January 2008 and March 2009, while the CNX 500 Index lost 64 per cent of its value, the fund limited the fall in its NAV (Net Asset Value) to 56 per cent. What’s more, Prima Plus’s consistency in performance adds credence to its suitability for conservative investors. On a one-year rolling return basis, the fund’s return beat the benchmark 85 per cent of the time in the last five years.

But the fund did not outperform its benchmark during recent upswings such as the one in 2007 or 2009-10.

These aspects make the fund more suitable for investors who have a limited risk appetite and those who look for moderate rather than spectacular returns.

Portfolio and Performance

During the bull markets of 2007, the fund mustered only 69 per cent returns compared with 82 per cent returns clocked by the CNX 500 index. Similarly, in the March 2009-Novemebr 2010 run-up, the fund sported 153 per cent returns as against the 163 per cent garnered by the CNX 500.

During this period, Prima Plus also underperformed peers such as HDFC Equity and Reliance Vision. Lower exposure to IT, Pharma and Auto stocks that did well in this season could be a reason.

The fund has, however, bettered its peers in the last one year. Although still not in the top-quartile of the diversified funds category, Prima Plus’s one-year return of 8.8 per cent is better than that of HDFC Equity and DSP BR Equity.

The returns could have been higher but for the increased holdings in the telecom sector (8-13 per cent) which was bogged down by regulatory issues and tariff pressures.

Although its consumer non-durable holdings increased over the last one year, the fund did not latch firmly on to this defensive bet, holding less than 5 per cent in the space.

Banks, Pharma, Telecom and Cement have remained the top sector bets in the last one year. The NAV per unit of the growth option is Rs 227.97.

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