Not going overboard on any particular sector and getting perturbed by sudden developments are central to this fund's investment philosophy. The result: ten-year annualised returns of 25.67 per cent, which no fund in the category (equity diversified) can match.
In its nine-year of existence, the Franklin India Bluechip has outperformed the benchmark Sensex in eight years and garnered a top quartile standing in six out of nine years. When Infosys fell in April this year, the fund did not lose its nerve. Rather, it continued to buy the stock all the way down. As the stock rebounded, the fund has benefited tremendously. It has been a similar case in HPCL where the fund has not pressed heavy sales and is also maintaining its sector weightage.
Mutual fund investors have also taken notice of this and the fund has crossed a 1,000 crore of assets, making it the third largest open-end equity fund in the country. This size can become a cause for concern except that the scheme is purely into large caps and so the impact cost on transaction should be low. Thus, even in the mid-cap driven rally of 2002, the fund stuck to large caps.
When mid-cap bank stocks were the flavour of the season, the fund managed to perform with SBI and ICICI Bank. It did not panic when disinvestment was put on a three-month hold and instead added on to energy stocks. This too has served the fund well.
The fund has managed bear markets well. In 2000, large cap IT stocks were relatively less hurt. And, second, non-IT stocks like ITC, HDFC and Ranbaxy helped cushion the impact of a falling market.
In 2001 too, when markets crashed, the fund nearly mirrored the index's returns. In September 2001 (post-9/11), it lost 16 per cent. But in the last quarter of 2001, the fund was able to make up for lost ground. This was due to the recovery made by some of its top IT holdings-such as HCL Technologies and Infosys-and a rally in cement and auto stocks like ACC and Hero Honda.
This fund deserves a place in every fund's equity portfolio. It truly is a blue chip.