Hopes of an economic recovery have moved prices of stocks across market capitalisations steeply up in the last one year. At the same time, many companies are fully not out of the woods yet, going by their financials.

For investors who don’t wish to take high risks at this point in time, but wish to invest in a stable portfolio, Franklin Prima Plus is a good choice.

Mid-caps add spice It is a fund that has been around for nearly 20 years. The fund focuses predominantly on large-cap stocks (market capitalisation of ₹7,500 crore and above).

These are better placed to withstand uncertainties and delays in the return of growth.

At the same time, it takes 10-15 per cent exposure to mid-caps. This will provide a leg-up to returns in case the broader market rally prolongs. The portfolio of Franklin Prima Plus appears well-geared for the long haul.

For one, large-cap stocks constitute 84 per cent of equity holdings now, providing a good cover against downside risks or market volatilities.

Second, although cyclical sectors have been market favourites in recent times, the fund is not high on industrials, capital goods or construction stocks.

It is rather playing the cyclical theme through autos and auto ancillaries, which constitute almost 12 per cent of the holdings currently. Being a consumer segment, many companies in this sector are already on the path to recovery.

Amongst others, the fund has invested in stocks such as Tata Motors, Eicher Motors and Amara Raja Batteries, which have reported good numbers in the June quarter.

In contrast, staid order flows and poor profitability are still affecting industrial cyclicals. Third, the fund also gives equal importance to defensive sectors such as software and pharma, with each of these sectors constituting 8-10 per cent of the holdings in the latest portfolio.

To take advantage of any further upmove in mid-caps, the fund holds about 15 per cent of equities in mid-cap stocks currently. But it has pegged down the risk by choosing a bunch of quality stocks such as Greaves Cotton, Jagran Prakashan and Gujarat Mineral Development Corporation.

For the risk-averse

These aspects make the fund an ideal bet for investors with a low to moderate risk appetite. The fund’s consistently good performance adds to its reliability. Over one-, three- and five-year periods, Prima Plus has outdone its benchmark, the CNX 500 index, by 5-6 percentage points.

It has done better than peers such as Birla Sun Life Frontline Equity and DSPBR Opportunities. It also contained losses well during previous market falls of 2008 and 2011.

Overall, Prima Plus suits conservative investors who are looking for steady, benchmark-beating returns.

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