Our Q & A session with Roshi Jain, fund manager, Franklin India High Growth Companies.
What is the investment strategy of your fund? (Including internal rules on investment universe, capitalization orientation and maximum cash allocation)
Franklin India High Growth Companies Fund is an open-end diversified equity fund that seeks to achieve capital appreciation through investments in Indian companies with high growth rates or potential over the medium to long term by following a combination of bottom-up stock selection blended with a top down industry theme
Since this is a diversified multi-cap fund, the investment universe spans companies across sectors and market capitalization ranges. The objective is to identify sustainable growth companies at reasonable valuations through a combination of various quantitative tools and qualitative judgment.
There are no set limits for exposure to any particular market capitalization range. The fund dynamically manages its market cap allocation based on the risk reward offered by the stocks at any point in time. The discretion for cash holding at the fund manager level is a maximum of 10% of AUM.
What are the essential attributes for the stocks to be in our portfolio?
Stock selection is a function of both quantitative and qualitative factors. Quantitative factors for inclusion of a stock in the portfolio would be medium term earnings growth higher than that of the market / sector and reasonable valuations. Qualitative factors would include judgement on sustainability of the business model, quality of management and governance, fair treatment of minority shareholders etc. The attributes mentioned above are by no means exhaustive since each stock has its unique characteristics which needs to be individually considered.
What kind of stocks never enter your portfolio?
We avoid stocks which have unsustainable business models, poor history of corporate governance and treat minority shareholders unfairly.
What will you attribute the relatively consistent performance of your fund in recent years?
Maintaining the discipline of our investment process is the key to our performance.