Franklin India Prima Plus

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THIS 17-year-old fund has come out as the 2011 topper among its large-cap peers with declared assets of more than Rs 200 crore. While broader markets as represented by Nifty have fallen nearly 17 per cent in the past 12 months, Franklin India Prima Plus ­ managed by Anand Radhakrishnan and R Janakiraman ­ has lost less than 9 per cent of its value in the same time. Here are some reasons why this might have occurred: As can be seen by time analysis of its historic performances, this fund is a stable performer and does relatively better than others during weak markets.

If one had invested Rs 10,000 in the fund 10 years ago, today, the investors would have Rs 98,000. In comparison, a similar investment in Franklin India Prima Plus's large-cap peers would now be worth Rs 58,000.

The similar figure for investment in Nifty including dividends would be around the Rs 52,000. This is not to say it's the best fund because there are other funds that have posted better returns. Against its benchmark S&P CNX 500, the fund appears to have done well over the over the short, medium and long term -one, three and five-year periods. However, the same is true for at least 60 per cent of its large-cap biased peers too.

 

But, Franklin India Prima Plus' ability to weather the market storm during bear phases is an attractive characteristic. In the past 19 complete quarters since 2006, the broader stock market (BSE 100) has given negative returns nine times. Surprisingly, this fund from Franklin Templeton pedigree has seen lower losses in eight out of those nine quarters.

On the other hand, the market has given positive returns in 10 out of 19 quarters. During these bullish periods, this fund has outperformed just four times ­ clearly showing its quality bias may not deliv er spectacular returns during bull rallies.

In terms of portfolio, one might argue that the fund manager's caution has resulted in its 12month low losses as compared with the fund peers. With around 10 per cent cash and equivalents in hand, Franklin India Prima Plus clearly has more `gun powder' when seen in light of the lower than 1 per cent-level compared with other large-cap funds. This is also a reason why the fund is about 90 per cent invested in stocks when its competi tors are almost (98 vested in equity per cent) invested in equities.

With about 52 stocks in its last declared portfolio, one would have expected that the fund would have spread its bets widely. But that is not the case with the top three sectors accounting for 44 per cent of its money.

Or, the top 10 holdings account for nearly 44 per cent of its entire money. In terms of sectors, financial services accounts for Franklin India Prima Plus' 19.5 per cent of assets ­ a three-year high. Similarly, around 16 per cent of its money is invested in technology stocks, also a three year high. Lastly, in case of cyclical consumer stocks as well as communication services portfolio, the fund managers appear to have put at least twice the percentage in each sector as compared with their rival large-cap peers' average.

These bets may not work.

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