Franklin Infotech looks more like a stock rather than a fund. IT bellwether Infosys alone accounted for 41 per cent of the portfolio of the fund and over 89 per cent of the fund's assets were concentrated in five stocks.
In short, this is what you get here-an aggressive, ultra-concentrated and large-caps dominated portfolio. There's another way to look at this fund. Through this fund, you can afford a collection of high-quality technology stocks for just Rs 1,000 a month through the SIP route, which may not be possible if you buy these stocks directly. This strategy did not work that well last year as Franklin Infotech registered its worst ever performance vis-à-vis its peers last year-the fund gained 43.75 per cent to miss the category average return of 50.32 per cent and was ranked sixth in the seven-fund category of technology funds. However, the same strategy and dependence on quality stocks clicked during the recent market crash-while an average tech fund was down 16.52 per cent between May 10 and June 30, the fund held on to its ground to some extent with loss of just 9.32 per cent. This has made the fund the best in the category so far this year. Its year-to-date returns of 13.72 per cent (as on August 18, 2006) look much better than the category average of 9.91 per cent.
Historically, the fund's performance has been average and has seen wild swings in its fortunes. From 2000 to 2002, it was a middle-of-the-road performer. In 2003, the fund failed to capitalise on the mid-cap rally despite having a good exposure (an average 37 per cent) to them-it finished in the bottom quartile of the category with a return of 37.43 per cent. But 2004 proved lucky. It signed off 2004 as the hottest tech fund with a return of over 30 per cent. Then again in 2005, it became a laggard.
Invest here if you are looking for a concentrated exposure to top IT companies and can withstand huge volatility that comes with a concentrated portfolio.