If you have a penchant for high risk, you could consider investing in Franklin High Growth Companies. The fund is currently betting on cyclical stocks and sectors that will see robust growth when the economy picks up. The fund is a top performer in the category of multi-cap funds and has outdone its benchmark (CNX 500) by 10-15 percentage points over one-, three- and five-year periods. Its returns are also better than those of multi-cap peers, such as Reliance Equity Opportunities and Franklin Flexicap.

Fund strategy Although both Franklin Flexicap and Franklin High Growth Companies invest in stocks across market capitalisations, the latter is more aggressive.

Consider the current portfolios of both these funds, for instance. The Flexicap fund tends to tactically shift allocations to large, mid- and small-caps based on valuations, but High Growth has tended to stay with higher mid-cap allocations. While Flexicap has brought down its mid- and small-cap holdings to just about 10 per cent of the portfolio now in the light of the volatility in the markets, High Growth holds almost double that allocation. Earlier, during the 2014 and 2012 rallies, the High-Growth fund’s mid-cap holdings moved up to 25-30 per cent at times, but Flexicap’s mid-cap exposure remained at 15-20 per cent.

Secondly, from the current stock preferences, it appears that Flexicap prefers defensive plays while High Growth favours more contrarian options. Flexicap holds pharma stocks, such as Dr Reddy’s Labs and Torrent Pharma among its top holdings, leans on private banks and also holds a bit of consumer non-durables, which is normally a defensive space. High Growth, on the other hand, holds three auto stocks among its top 10 holdings and has entered the public sector banks space with exposure to Punjab National Bank and Bank of Baroda.

High Growth holds about 10 per cent in debt and cash when markets seem heated up or iffy. It has held only about 90 per cent in equities since late 2014. Thanks to its ability to time its equity allocations and sector moves well, the fund has done better than the benchmark during rallies, such as 2012, 2014 as well as in volatile times.

Portfolio Banks have always remained a favourite sector with holdings in this space moving up from 21 per cent in the beginning of the year to 26 per cent at present.

The fund is betting big on cyclicals such as auto, cement and industrials.Auto stocks recently added include Mahindra and Mahindra, Bajaj Auto and Greaves Cotton.

Telecom has always been another of the fund’s top choices with holdings in Idea Cellular at 4.7 per cent currently. In line with its strategy of going easy on highly-valued defensives, it has exited pharma stocks, such as GlaxoSmithKline Consumer Healthcare, Dr Reddy’s Labs, Torrent Pharma and Ipca Labs in recent times.

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