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If you believe that frontline IT companies would call the shots in the IT sector, then Franklin Infotech is the fund for you. Consistent performance across the time periods adds up to its charm.

Franklin Infotech has been one of the success stories among technology funds in India. Being the oldest member of the category — launched in August 1998 — the fund has witnessed both ups and downs of the sector. Although its one-year return as on January 11, 2003, does not make it a category topper, its overall performance is encouraging.

Much of the fund's success can be attributed to its consistent focus on frontline IT stocks. Infosys and Satyam have been Franklin Infotech's prominent holdings, accounting for an average one-third of the portfolio. Even during the recent mid-cap rally, the fund stuck to top-rung IT companies. As a result, the fund landed in the bottom half of the category, while many of its peers surged ahead by shifting to mid-caps. However, fund manager R. Sukumar believes that valuations of middle-rung IT companies are out of sync with fundamentals and are not likely to hold up in the long run.

This strategy has worked well for the fund. Whenever top-rung IT stocks have rallied, it benefitted. For instance, post-9/11, rising prices of large-caps gave the fund an extra push. Thus, Franklin Infotech had outperformed the category by a huge margin by January 2002.

While the fund occasionally placed bets on second-rung companies such as PSI Data Systems and Visualsoft Technologies, it largely avoided more speculative stocks such as Himachal Futuristic and Global Telesystems, which were severely hammered during the downturn.

Despite a low turnover ratio, Franklin Infotech has been reasonably quick in re-allocating its portfolio. For example, initially, NIIT was one of the fund's biggest investments. Sensing deterioration in the company's prospects, the fund exited NIIT in 2001. Franklin Infotech has largely remained fully invested, though at times cash positions were in the region of 20 per cent. In a bid to keep pace with the emerging BPO opportunity, the fund, in the recent months, has increased its exposure to companies like E-Serve International and Infotech Enterprises.

In all, Franklin Infotech is a better-run and a more consistent performer in the category. Investors who would like to have an exposure to leading technology companies, should find this fund an attractive offering.