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Franklin Prima Fund

Vinayak Gadre invested in the Franklin India Prima fund when it had a 5-star rating. The fund has now slipped to a 3-star rating & he wants to know if he should stay invested or opt out

I had invested in Franklin India Prima since it had a 5-star rating. It then became a 4-star fund and is now has just a 3-star rating. Should I switch to another 5-star fund or wait for some time before deciding? Is there any scope for improvement in this fund's ranking?
-Vinayak Gadre

As is evident from its falling star ratings, Franklin India Prima has not been consistent with its performance over the past few years. This mid and small cap heavy fund has had a three star rating for eight months now. From being the best performing equity fund in 2003, it has fallen sharply and has been in the bottom quartile of the category rankings for two years (rank in 2006 - 122/145, 2007 - 123/162). One of the reasons for its poor performance in 2007 is the low exposure it had to all top performing themes like Energy and Financial Services.

If you have significant portfolio exposure to this fund, we suggest its time you start reducing exposure gradually and shift to funds that have proved their worth over the long run. You can invest systematically in other well rated mid cap funds which have a consistent track record. Sundaram Select Mid Cap and Reliance Growth are two such funds which have a five star rating and have always managed to be a part of top performing funds in the mid cap space.

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