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Franklin India Prima Fund: Consistent mid-cap fund
Thu, Oct 08, 2015
Source : Khyati Shah, Citrus Interactive

Franklin India Prima Fund is a mid-cap equity diversified fund. The objective of the fund is to achieve a high degree of capital appreciation through investments in smaller and faster growing companies. The fund was launched in December 1993 and is benchmarked against the CNX Midcap index. The fund has an AUM of Rs. 1,297 crore as on June 30, 2015 which has gone down by 32 crore as compared to the month of May 31, 2015 (1329 crore). The fund has an AUM of Rs. 3,697 crore as on August 31, 2015 which has gone down by 106 crore as compared to the month of July 30, 2015 (3,803 crore).

Performance

The fund’s performance across different time horizons is extremely good as seen in the table given below. Since its inception the fund has given outstanding CAGR returns of 21.10 per cent whereas CNX Midcap index has given CAGR return of only 13.96 per cent.  Its performance since inception has done better that its benchmark by over seven percentage points in CAGR terms. In the time horizon of 1, 3 and 5 years it has clearly been in the top quartile of its peer-set, and in YTD it is in the second quartile of the peer-set. The outperformance margin vis-à-vis its benchmark as well as equity diversified category is substantially high.

 

YTD

1 Year

3 Years

5 Years

Since Inception

Franklin India Prima Fund

3.53

19.16

30.21

16.8

21.1

CNX Midcap Index

3.18

13.72

18.28

7.21

13.96

Category Average

1.78

10.82

20.27

10.66

NA

Rank

57/157

20/156

15/145

15/135

NA

Figures are in % as on Sept 30, 2015; Returns above 1-year in Compounded Annual Growth Rate

When we look at the calendar year returns it’s quite clear that this fund has beaten its benchmark in each of the last calendar five years except for the year 2010 which is marginal.  It has beaten the category average in 2011, 2012, 2013 and 2014 – the underperformance in 2010 being marginal.

 

2010

2011

2012

2013

2014

Franklin India Prima Fund

19.11

-22.06

44.42

7.4

78.14

CNX Midcap Index

19.16

-31

39.16

-5.1

55.91

Category Average

19.54

-24.08

34.08

5.25

54.04

Rank

66/131

44/138

24/142

54/146

20/149

All figures in % as on Sept 30, 2015


Portfolio Characteristics:

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken lower risk compared to the category.

 

Standard Deviation

Beta

Franklin India Prima Fund

0.81

0.67

Category Median

0.9

0.87

Risk-adjusted Returns: In terms of measures of risk such as Treynor ratio and Sharpe ratio (measured over last three years) the fund has delivered higher return for risks undertaken in the portfolio vis-à-vis its category median.

 

Treynor

Sharpe

Franklin India Prima Fund

0.18

0.14

Category Median

0.1

0.09


Sector concentration: The concentration of the fund in the top three, five and ten sectors is much lower than the category median.

 

Top 3

Top 5

Top 10

Franklin India Prima Fund

32.48

42.15

56.77

Category Median

36.4

49.66

70.19

Company concentration: The fund is diversified with concentration in top three, five and ten companies in its portfolio being much lower than the category median.

 

Top 3

Top 5

Top 10

Franklin India Prima Fund

15.7

21.38

34.38

Category Median

18.62

27.01

43.96

Sector & Company Concentration signifies that the funds maintain a fairly diversified portfolio.

 

Processes

The fund managers are following an active investment strategy taking defensive/aggressive postures depending on opportunities available at various points in time.

Number of equity holdings:  As of July 31, 2015, the fund holds 58 stocks which are higher than the category median of 47 stocks in the diversified equity segment.

The top 5 sectors in the portfolio had an allocation of 42.15% which is lower than the category average of 49.66%. The fund’s exposure to cyclical stocks currently is 65.33% followed by defensives with 9.36% & services with 8.39%. The Top five holding are Yes Bank Ltd., Torrent Pharmaceuticals Ltd., FAG Bearings India Ltd., Amara Raja Batteries Ltd. And  Finolex Cables Ltd.

The fund’s expense ratio is 2.32 per cent which is slightly lower than the category average of 2.36 per cent. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment required for the fund is Rs. 5,000.

 

Fund Manager

Franklin India Prima Fund is managed by are two fund managers: R Janakiraman and Roshi Jain. The fund has done really well since R. Janakiraman took over in 2011.

Mr. R. Janakiraman has over 15 years of experience in research field and is responsible for providing Equity research Support. He is a B.E and PGDM (Business Management). He manages several other funds such as Franklin India Flexi Cap, Franklin India Prima Plus Fund, Franklin India Smaller Companies Fund, Franklin India High Growth Companies Fund, & Franklin India Opportunities Fund. These funds have a good track record which speaks positively about the fund manager’s skills. Prior to joining Franklin Templeton, he has also worked with Indian Syntans Invt Pvt. Ltd., Citicorp Information Tech Ltd., and UTI Securities Exchange Ltd.

Ms. Roshi Jain is the Vice-President & Portfolio Manager. Ms. Jain is a CFA, ACA and PGDM from IIM-Ahmedabad. Ms. Jain has been a research analyst at Franklin Templeton responsible for providing research support on the Indian capital goods and infrastructure sectors for 9 years. Ms. Jain has been in the investment Industry for the past 12 years. Prior to joining Franklin Templeton, she worked as a Financial Analyst at Goldman Sachs, London. She is also fund manager for Franklin Asian Equity Fund, Franklin Build India Fund, FT India Feeder - Franklin US Opportunities Fund, Franklin India Flexi Cap Fund, Franklin India Prima Fund & Franklin India Smaller Companies Fund.


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Franklin India Prima Fund has a good track record of delivering consistent returns and it has the potential to deliver high capital appreciation over time. 

 
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