Franklin India Prima Fund is an open ended equity scheme with a primary investments in mid-and small-cap companies.
Manit Goyal
Franklin India Prima Fund is an open ended equity scheme with a primary investments in mid-and small-cap companies.
The scheme is one of the earliest mid-cap funds launched (in December 1993) in the country and its past performance has been extraordinary. The five-year returns are at around 57.89% compounded annualised, which are not only better than the benchmark 46.50% but also better than most of equity funds with five-year track record.
However, the fund’s performance for the last 3-4 years has not been better than most of midcap funds - in fact, it has seen a huge fall in rankings.
The three-years returns are at around 40% compounded annualised which are not only below the category average but also one of the lowest among midcap funds. Similar has been the trend on two years, one year and less than one year returns horizon. It seems like the fund’s new fund manager combination has not worked too well and so K N Sivasubramanian has been asked to run the fund once again.
The asset allocation for the last two years has been very aggressive — on an average around 95% of the corpus is invested in equity instruments.
The fund has maintained a diversified allocation of around 20 sectors on an average for last two years. However, at certain times, the sectoral allocation is concentrated, with the top five sectors accounting for more than 50% of the portfolio. This isn’t healthy, as the fund is exposed to sector risk.
The top five sectors in the portfolio are pharmaceuticals, textile products, consumer non durables, industrial products and auto & auto ancillaries. Of these, two — pharmaceuticals and consumer non durables — have been underperformers. On an average, these sectors have accounted for 25% of the portfolio over the last two years. They are still among the top five sectors for the fund.
The portfolio composition has also been consistent with the stated strategy. In the last two years, the core holdings for the fund have accounted for more than 65% of the corpus. The fund has maintained a portfolio of around 40-50 stocks, of which 22-29 have consistently found a place in the monthly portfolio.
By arrangement with mutualfundsindia.com,a unit of Icra Online
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