The teething troubles of the fund extended rather long as it kept losing money in its first two complete calendar years (1997 and 1998). The fund finally got its act together only around 1999 when it returned 87.64 per cent. But even this performance looked dismal against the category return of 129 per cent.
The three blockbuster years of 2000, 2001 and 2003 offered some relief for investors. Through 2000-2001, when the markets spelled disaster, the fund managed to contain investor losses to (-) 2.78 per cent (category - 24.64 per cent) and (-) 6.82 per cent (category - 19.45 per cent) respectively. In 2003 it shocked everyone by returning 138.82 per cent as against the category average of 110.17 per cent. Unfortunately that sort of performance was never repeated and since then the performance of the fund has been lackluster.
The fund is not too diversified with a portfolio of 26 odd stocks. The portfolio is largely skewed towards large-cap stocks. With an investible corpus of Rs 290.87 crore, the fund is relatively quite small.
Since the beginning of 2006, the fund started placing bigger bets on the energy and technology sector. The allocation to the financial services and metal and metal products also remains quite high. The top three sectors of the fund's portfolio are similar to the top three constituents of the BSE Sensex through 2006 namely- Technology, financial services and energy in that order. This is in stark contrast to what the category is doing where the top three sectors were Technology, Basic Engineering and Consumer Non- durables.
Given that Templeton India Growth comes from a fund house that operates nine diversified equity funds, there are much better choices for investors within the fund house.
This article was originally published on April 20, 2007.
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