It's one of few old funds to attract fresh investments
Prima's ability to generate gravity-defying returns is well proven now. Even though these gains come with higher risk, the fund's record of generating huge returns year-after-year is good enough to convince investors to entrust some part of their portfolios to it. A well-diversified portfolio, continuity of fund manager K.N. Siva Subramanian since 1993 and consistent performance make this fund one of the finest choices among the mid-cap funds.
In the last five calendar years, Prima has managed top-quartile returns. Last year, though many other mid-cap oriented portfolios did better than Prima, it gained 58.31 per cent as against an average peer's return of 46.67 per cent to retain its top quartile rank. In 2003 and 2001, it was the hottest fund. Besides, it has the second best five-year trailing return of 50.94 per cent as on February 6, 2006.
Fund Manager K.N. Siva Subramanian knows how to get maximum out of mid-caps. He takes care of the poor liquidity associated with them by diversifying the portfolio across sectors and stocks. With the markets at their peaks, the number of stocks has increased further to 50 to 60 through 2005. He also loves buy-and-hold strategy. For instance, he has stuck with picks like Raymond, Cummins India, Goodlass Nerolac Paints, Torrent Pharmaceuticals etc and benefited immensely.
While Prima has everything that one looks for in a quality fund, still, you should be mentally strong and ready to stay invested for the long-term here. Mid-caps are always risky and this fund is no exception. Its standard deviation of 7.69 is on the higher side in the category. But you should be ready to swallow it, as the fund more than compensates for it through superlative returns.
Doors Closed For Now
Suspension of fresh sale of units under Franklin India Prima Fund has created undue confusion among investors. Value Research has been flooded with queries on the future of the fund, whether the decision is bad for existing investors or should prospective investors rush to sign their cheques in favour of the high profile mid-cap fund. Let's make it clear that the fund house as imposed a moratorium only on lump sum investments. Investors are free to buy units through the SIP or STP route, which anyway is the best way to enter any equity fund. Secondly, it's a positive development for existing investors. Throughout the world, many mid- and small-cap funds refuse fresh investments when they find it difficult to invest further sums given the low liquidity of such stocks.
This article was originally published on March 28, 2006.
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