This biggest diversified equity fund is also the first choice of many large-cap investors. In over 11 years of its existence, Franklin India Bluechip's annualised return of 27 per cent is no fluke. Sticking to its large-cap portfolio, the fund has never disappointed its investors. Encouragingly, in ten full calendar years, the fund has outperformed its peers on nine occasions.
Though the past two years have belonged to mid-caps, Franklin India Bluechip has still managed to deliver good returns. In 2003, it gained 121 per cent and in 2004, it is up nearly 13 per cent, thus beating most funds in the category. Some of the fund's large-cap picks like Infosys, Satyam, ITC and L&T (accounting for one-quarter of the portfolio) have gained tremendously in the past six months, thus enabling the fund to make a strong comeback after a dismal performance in early 2004. During January-May 2004, the fund lost 23 per cent but has managed to gain 34 per cent since then largely because it held one-third allocation to technology and financial services sectors, which have gained the most in the recent rally.
Franklin India Bluechip's liking for large-caps can be gauged from the fact that the fund continued to hold Infosys (the stock, which had always been one of its top picks) when it fell in April 2003 and benefited tremendously as the stock rebounded. Similarly, in case of HPCL, it held its nerve and increased its exposure, even after its divestment was put on hold by the Supreme Court. The fund didn't jump into the mid-cap rally bandwagon in 2003. Instead, it persisted with its large-cap holdings. When mid-cap PSU banks were the flavour of the season, the fund managed to perform with its old favourites SBI and ICICI Bank.
One of the astonishing features of the fund's investment style is the buy-and hold-strategy. Fund manager K.N. Siva Subramanian doesn't try to time the market. For instance, whether it is Infosys, SBI, Reliance or Grasim, the fund had them all for a long time.
Though it may not be the top-performing fund at the moment, its long-term performance has so far been worth appreciating. There is every reason for this fund to be the core of each investor's equity portfolio.
This article was originally published on January 11, 2005.
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