Franklin India High Growth Companies Fund with a distinct mandate of finding companies that are likely to deliver higher earnings growth than the market, this fund has stayed put at a five-star rating for the last three years.
Franklin India High Growth Companies Fund earnings focus tilts the portfolio towards sectors and stocks that are on the cusp of a turnaround. Despite its name, the fund is quite valuation conscious and doesn't overpay for growth. The qualitative factors it screens for are sustainability of the business model, quality of management and governance, and fair treatment of minority shareholders.
Market-cap allocations are managed dynamically based on market conditions. This fund usually has a higher allocation to mid-cap stocks relative to its peers but has seen its large-cap weights creep up in the last one year. In recent times, about 65 per cent of the portfolio has been invested in large caps, 30 per cent in mid caps and the rest in small caps.
Franklin India High Growth Companies Fund has beaten its benchmark every year since launch from 2008. It has managed a sizeable margin of outperformance over three and five years, with the excess returns at 4-9 percentage points against the index and about 1-6 percentage points against the category. The fund has been quite an aggressive outperformer in bull phases such as 2009, 2012 or 2014. But having flagged off in the severe bear market of 2008, it marginally trailed the category that year and in 2011 as well. It is yet to be tested in a severe bear market.
A value-conscious fund that has spotted trend reversals in sectors ahead of the market.
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