Franklin Prima Not Doing Well | Value Research I have been investing in Franklin India Prima Fund through SIP route. But during the last six months, it has been an underperformer. Should I switch to Franklin India Flexicap or Franklin India Prima Plus? I am a long-term investor.-Veenit Mohta
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Franklin Prima Not Doing Well

I have been investing in Franklin India Prima Fund through SIP route. But during the last six months, it has been an underperformer. Should I switch to Franklin India Flexicap or Franklin India Prima Plus? I am a long-term investor.
-Veenit Mohta

I have been investing in Franklin India Prima Fund regularly through SIP route. But during the last six months, the mid-cap oriented fund had been an underperformer. Should I switch to Franklin India Flexicap or Franklin India Prima Plus? I am a long-term investor with a time horizon of 7-9 years.
—Veenit Mohta

Franklin India Prima has been a laggard in the last six months. Over the six-month period ending September 6, 2006, the fund has delivered negative 3.5 per cent returns, ranking it 126th in the category of 149. You have also rightly pointed out that this has a lot to do with the fund being heavily invested in mid-cap stocks. But please remember that the fund is mandated to invest in stocks of smaller companies and therefore it will always be heavily skewed towards mid- and small-cap stocks. Moreover, time and again it has been proved that when markets fall, mid- and small-caps fall much more that the large-cap stocks. And in the aftermath of the May collapse, the fund's performance looks uninspiring.

Coming to the question of whether you should switch or not, we would advise you to first take a holistic view of your portfolio and decide how much you want to invest in mid- and small-cap stocks. If your current allocation to mid- and small-caps is much more than what you would like it to be, then it would make sense to switch.

Mid-cap oriented funds are bound to be more volatile. There will be times when they would run-up substantially ahead of the more conservative peers. But during testing times, there is also a possibility of a sustained under performance. If you find this too bothersome, then consider switching to a more stable large-cap dominated fund like Franklin India Prima Plus.

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