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Franklin Build India Fund Unveiled

Franklin Templeton is the most-recent convert to the infrastructure theme

Franklin Templeton has launched the Franklin Build India Fund, an open-end infrastructure fund. The fund will invest at least 65 per cent of its assets in companies engaged in development, operation, management and maintenance in the infrastructure-related sector, while up to 35 per cent of the assets can be invested in other companies. The fund can also keep 30 per cent of its assets in fixed income instruments.

The fund will follow a bottom-up approach in picking stocks without any capitalization bias.

Fund Manager

Anand Radhakrishnan, a Chartered Financial Analyst (CFA) and PGDM from the Indian Institute of Management, Ahmedabad (IIMA) is the designated fund manager. He has over 12 years experience in fund management with Franklin Templeton Investments, Sundaram Asset Management and SBI Funds Management. He also manages 6 other equity funds and equity allocation of hybrid funds.

Fund Family

Franklin Templeton started operations in India in 1996. In 2002, it acquired ITI Pioneer Asset Management. As on June 30, 2009, it is the 6th-largest equity fund manager with Rs 11,860 crore in equity funds. Equity assets account for 46 per cent of its total assets under management of Rs 25,658 crore.

Its lineup of 17 equity funds spans a variety of strategies, capitalisation and sector-focused funds. Of these, 11 funds are rated in their respective categories by Value Research and 6 are rated as 4-star, 4 are rated 3-star and 1 is a 2-star fund.

Suitability and Recommendation

Government’s emphasis on infrastructure evokes positive outlook for infrastructure-related stocks. Infrastructure funds also proved reasonably rewarding for early investors. But the theme has a fairly diverse investment universe. Besides, there are 13 other open-end infrastructure funds to choose from, of which 10 have over 3-year performance track-record. In light of this, an equity fund with a good performance track record should be the first choice for investors. A pure infrastructure-play vehicle needs to have proven credentials.

The Infra Universe
   Returns *
Funds  Launch  1-Mth  6-Mth  1-Yr  3-Yr
AIG Infra and Eco Reform Reg Jan-08 -6.91 43.19 -0.72 -
Birla Sun Life Infrastructure Plan A Feb-06 -10.45 51.83 4.63 11.54
Canara Robeco Infrastructure Nov-05 -7.63 57.93 8.45 15.88
DSPBR T.I.G.E.R. Reg May-04 -10.42 46.23 2.28 14.37
ICICI Prudential Infrastructure Aug-05 -9.10 35.34 -1.63 20.48
JM HI FI Mar-06 -17.49 -3.51 -44.94 -18.93
Sahara Infrastructure Fixed Pricing Mar-06 -9.69 53.97 15.20 16.94
Sundaram BNP Paribas CAPEX Opp Reg-D Sep-05 -14.65 56.77 -5.99 12.06
Sundaram BNP Paribas CAPEX Opp Reg-G Sep-05 -15.26 54.03 -6.67 11.91
Tata Infrastructure Dec-04 -11.13 43.20 -7.26 13.14
Taurus Infrastructure Mar-07 -7.40 91.05 19.54 -
UTI Infrastructure Apr-04 -12.08 36.32 -3.99 11.99
* All returns as on July 10, 2009

Basic Details

Type: Open-End Equity Fund
NFO Opens: July 10, 2009
NFO Closes: August 8, 2009
Plan/Options: Growth and Dividend (Payout and Reinvestment).
Minimum Application Amount: Rs 5,000/-
Minimum Additional Application/Redemption: Rs 1,000/-
SIP Facility: Minimum 12 cheques of Rs 500/- each or minimum 6 cheques of Rs 1,000/- each.
Benchmark: S&P CNX 500
Load Structure:
Entry Load: For investments of less than Rs 5 crore, 2.25 per cent.
Exit Load: For investments less than Rs 5 crore, 1 per cent for redemptions/switch-outs within 1 year. For investments of Rs 5 crore or more, 1 per cent for redemptions/switch-outs within 6 months
Annual Recurring Expense (maximum): 2.50 per cent (including Investment Management fee of 1.25 per cent).

The fund will be investing in companies that are either directly or indirectly engaged in infrastructure-related activities.