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Franklin India Bluechip Fund - Large Cap Strength

| 5/23/2011 3:47 PM Monday

It has been a rough ride on D-Street for the past few months with high volatility and uncertain-ty having gripped the nerve of all the market participants. The main reason for this uncertainty is the headwind over the macro-economic dynamics wherein inflation has continued its northward journey. But to ride over such volatility, investors can allocate a chunk of their portfolio to large-cap stocks. That is because these blue-chips not only provide the right amount of stability to the portfolio but also help to contain losses better than the small and mid-cap stocks in volatile periods.

And as the name suggests, Franklin India Bluechip is predominantly a large-cap based fund that has rewarded its investors really well. Launched in 1993, it is one of the oldest funds in the industry which has given annualised returns of 25.25 per cent since its inception. In this long tenure the fund has seen its ups and downs, though it has managed to beat the cat-egory in every year in the last ten years and stood at the number one position in this time period. Further, out of the last ten years, the fund has provided top quartile returns for seven years.

In the one and three-year period too the fund has managed to outpace its category by 393 and 748 bps and not only this but it also has the best Sharpe Ratio (measure for risk taken for every unit of return) in the large-cap funds’ category. Anand Radhakrishnan has been managing this fund quite decently since April 2007 while since February 2011 Anand Vasudevan has started to co-manage this fund. At Franklin Templeton India, Radhakrishnan also manages funds like Franklin India Pharma, Taxshield, Infotech and equity portfolio of all hybrid funds. He is also a co-portfolio manager for Prima Plus and High Growth Companies Fund.

Most of these funds have managed to outperform their category returns in the longer run. Coming back to this fund, its portfolio has continued to have a large-cap bias wherein 86 per cent of its net assets in equity were invested in the large-cap stocks as of March 2011. Its top ten stocks and top three sectors contributed nearly 44 and 48 per cent respectively. This fund, as per the AMC’s style, follows the buy and hold strategy. Looking at the fund’s mandate to invest in large companies as per market capitalisation, its consistent long-term track record, and current market volatility, low to moderate risk investors can take exposure to this fund.

 

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