This fund may not look flashy right now but it's definitely a matured player. It has stuck to its large-cap philosophy and put up a consistent show through bull and bear phases
14-Apr-2005 •Research Desk
There's a good reason why Franklin India Taxshied is still the largest fund of the tax-planning category despite an average performance in the recent past. It has a great long-term performance, a focused approach and a large-cap orientation, making it the ideal choice as the core holding of any long-term portfolio. It has always put up a consistent show through investments in quality large cap stocks and so far kept itself away from the dangerous charm of mid- and small-cap stocks like some other funds in the category. In fact, this is exactly the reason why the fund has failed to match the returns of some of its aggressive peers in recent times.
For example, even in the mid-cap-dominated years of 2003 and 2004, the fund did not bet high on them and maintained a large-cap portfolio with an average exposure to large-cap stocks were 76 and 69 per cent, respectively.
The fund has largely followed a buy and hold strategy. For instance, ITC, HPCL, SBI and Infosys have found a permanent place in the portfolio since 2000. Even when Infosys tumbled in April 2003, the fund stuck to the stock and reduced exposure only when the price climbed to pre-April level.
Barring few occasions, technology has been the favourite sector for the fund. Launched before the tech-led bull-run of 1999-2000, it managed to fully capitalise on the boom with a tech heavy portfolio (70 per cent in January 2000). This led to huge inflows into the fund-its unit capital grew 10 times in 2000. The fund then deployed the new money into old economy stocks, which reduced the impact when tech collapsed. Consequently, it was among the three funds that ended 2000 on a positive note.
The fund managed the bear market of 2001 very well. It lost 13 per cent against the average peer's 20 per cent decline. In 2002, it marginally underperformed the category.
In 2003, the fund gained 101 per cent but under-performed the category. It did everything right in 2003-kept a higher allocation to performing sectors like banking, energy and healthcare. But its policy of sticking to large-caps resulted in an average performance.
This fund may not look flashy right now but it's definitely a matured player.
