Franklin Internet Opportunities Fund was launched in February 2000 at the peak of the tech boom. Its investment universe covered e-commerce, dotcoms, Internet service providers and companies (banks, service sector) that used the Internet for business growth.
March 2004, it was repositioned as Franklin India Opportunities Fund with the mandate to invest in any opportunistic sector or stock. With a lot of steam still left in the bull run, there was no looking back. Its current 1-year returns of 52.57% and 2-year returns of 54.63% are way ahead of the category average of 31.37% and 44% respectively.
Being an opportunistic fund, it changes its complexion quite rapidly. The fund manager will not adhere to any market cap and will go wherever he finds opportunities. Currently, 75% of the portfolio is in mid- and small-caps. The past two months, the fund manager has been holding around 11% in cash.
The buy-and-hold strategy will obviously not be in sync with this fund's style and very few stocks are held on to for a considerable time frame.
Currently, Construction (including real estate) corners 24.29% of the fund's portfolio. Despite such a concentrated sector bet, the fund manager has shown a reluctance to bet heavily on individual stocks. While the fund has just 32 stocks, four of them account for less than 1% of the portfolio and another 14 are just 2% or less. So should any turn out of be multi-baggers, the effect would be subdued.
Looking at the pedigree of the fund house and fund manager, this one has the potential to come up with great ideas and deliver good returns. But this fund is not for the faint hearted. In a racy market it will do well but will get hammered in a sharp decline because its portfolio is full of sharp beta stocks.
This article was originally published on February 15, 2007.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
