K. VENKATASUBRAMANIAN | September 28, 2013 | Business Line
Investors looking for steady and consistent large-cap performers can buy units of Franklin India Bluechip (Franklin Bluechip). The fund sticks to its mandate of investing in large companies and picks its stocks mostly from the Sensex and the Nifty baskets.
It has completed nearly 20 years and is one of the oldest of its kind, with a proven track record. This has been made possible by prudent value calls most of the time.
The fund may lag behind the markets in the short-term of about a year, but outperforms its benchmark — Sensex and most peers over the long run.
Over three- and five-year timeframes, the fund has outperformed the Sensex. The scheme contains downsides during market falls and is able to participate reasonably well during rallies.
On a yearly rolling return basis, the fund has delivered higher returns than its benchmark nearly 80 per cent of the times.
In the last five years, Franklin Bluechip delivered compounded annual return of 11.3 per cent, much higher than peers such as DSPBR Top 100 Equity, Kotak 50 and SBI Bluechip. The fund has generally remained in the top quartile of funds in the large-cap category.
Franklin Bluechip is a suitable fund to form the core part of the portfolio for an investor with a medium risk appetite.
Investors can consider buying the scheme through the systematic investment plan (SIP) route with a time horizon of 5-7 years at least.
PORTFOLIO AND STRATEGY
Franklin India Bluechip is in a set of stocks with stable earnings and reasonable revenue visibility. The average market capitalisation of stocks held in its portfolio is over Rs 58700 crore.
The company maintains a portfolio of 40-45 stocks with concentration of over 5 per cent restricted to the top 3-4 companies that it holds. The scheme has been holding cash to the turn of 5-8 per cent over the past few years as volatility has been high in the equity markets. This helps it cushion downsides.
Franklin Bluechip also has a value orientation. It has not gone overboard on overheated segments such as FMCG and has in fact reduced exposure to the sector significantly.
It has increased investments in beaten down segments such as telecom services.
Banks have always remained its top pick, while software and pharma are other prominent segments that are rotated based on momentum and valuation.
While familiar names such as Infosys, Bharti Airtel, ICICI Bank, RIL and Dr Reddy’s populate its portfolio, it has also added Cognizant Technology Solutions, a top-tier IT services player listed in the US with large presence in India, to perk up portfolio returns.
The fund has given compounded annual returns over 22 per cent since its launch in 1993 and has rewarded investors who stick around for long timeframes. Invest in it for steady and above-average returns.