Fund Call. Franklin India Bluechip: A dependable bet for the long run

With equity markets turning volatile, investors with a long-term horizon can consider large-cap oriented funds that provide a fair degree of safety.

Franklin India Bluechip, which has a steady long-term track record is a good bet for investors. It is among the oldest funds with more than two decades of track record. The fund has delivered an annualised return of 10.9 per cent against the benchmark BSE Sensex’s return of 6.7 per cent over the last 10 years. Over one, three and five-year time frames, the fund has delivered better returns than its benchmark as well as its peers in the large-cap category. In these periods, the outperformance has been to the tune of 3-5 percentage points.

However, due to its somewhat mediocre performance in 2012 and 2013, the fund slipped into the second quartile. But the fund bounced back, delivering good performance in the 2014 market rally and has given 37 per cent return, higher than the category average of 35 per cent.

The fund also managed to contain the downside well during the lacklustre market of 2015.

In 2016 too, as markets were on a roller-coaster ride, the fund has outperformed its benchmark.

On a one-year rolling return basis, over the past five-year period, Franklin India Bluechip has outperformed its benchmark about 70 per cent of the time. The fund is fully large-cap focused with less than 5 per cent of its allocation into mid-cap stocks.

Investors with low risk appetite can consider adding this fund to their core portfolio. Given the on-going choppiness in the market, one can take the systematic investment route to buying units of the fund with a long-term time frame of more than five years.

The fund predominantly invests in large-cap stocks from the Sensex basket, Nifty and BSE 100. It sticks with this mandate even during market rallies when mid- and small-cap stocks are on a roll. This can lead to underperformance when compared to peers that have a relatively higher exposure in mid or small-cap stocks. But over the long run, the fund has given consistent return, outperforming its category.

Banks, automobile and software have been the top three sector holdings over the past year. The fund has upped its allocation in the beaten-down automobile and defensive sectors such as software as well as pharma over the past one year.

Franklin India Bluechip has taken cash and debt calls to the tune of 5-10 per cent of its portfolio, during volatile markets. For instance, in 2012,the scheme increased its cash holdings to around 10 per cent of its portfolio. It has also deftly moved out of cash, when the market has been on an uptrend.

The fund has a diversified portfolio with 40-45 stocks; individual exposure of over 4 per cent is limited to the top three or four stocks. It has a mix of cyclicals and defensive stocks.

Private sectors banks and stocks such as Bharti Airtel, Infosys, Larsen & Toubro and Tata Motors are some of the key holdings of the fund.

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