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Franklin India Prima Plus: Consistent Multi Cap Fund
Sun, Feb 14, 2016
Source : Jeni Shukla, Citrus Interactive

Franklin India Prima Plus Fund is an open-end diversified equity multi cap fund. It was launched in September 1994. It is benchmarked against the Nifty 500 Index. The fund has an AUM of Rs. 6,337 crore as on December 31, 2015 which has gone up by Rs. 2,769 crores as compared to a year ago (Rs. 3,568 crore as on 31 December, 2014). This is an impressive 77% growth in the AUM in the last 12 months.

 

Performance

Franklin India Prima Plus has shown great consistency in terms of beating its benchmark index as well as equity diversified category average across time horizons (refer to table below). It figures as a first quartile fund in the year-to-date and 2 year period while second quartile fund in the other time periods in the table below.

Scheme Name

YTD

6 Months

1 Year

2 Years

5 Years

Since Inception

Franklin India Prima Plus Fund

-4.48

-9.39

-6.03

27.18

14.34

19.09

NIFTY 500

-5.73

-10.79

-11.54

16.07

7.46

13.34

Category Average

-6.12

-10.32

-7.73

24.6

12.2

NA

Rank

23/165

52/161

56/158

45/149

  37/137

NA

Figures are in % as on January 31, 2015; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

The fund has beaten its benchmark and the equity diversified category in each of the last five calendar years except 2012. It was successful in limiting its fall (relative to its benchmark as well as category average) in the year 2011 which was a bad year for the markets. It was in the first quartile in 2011, third quartile in 2012 and 2013 and second quartile in 2014 and 2015.

Scheme Name

2011

2012

2013

2014

2015

Franklin India Prima Plus Fund

-16.42

31.04

5.55

56.79

4.38

NIFTY 500

-27.19

31.84

3.61

37.82

-0.72

Category Average

-23.95

34.05

5.43

53.99

3.63

Rank

10/138

84/142

79/146

50/149

63/158

All figures in %

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken lower risk compared to the category median.

 

Standard Deviation

Beta

Franklin India Prima Plus Fund

0.83

0.8

Category Median

0.95

0.89

 

Risk-adjusted Returns: In terms Treynor and Sharpe ratio (measured over last three years), the fund has provided higher risk-adjusted returns than the category median.

 

Treynor

Sharpe

Franklin India Prima Plus Fund

0.08

0.09

Category Median

0.06

0.07

 

Portfolio Characteristics

Sector Concentration:  The fund’s concentration in the top 3, 5 and 10 sectors is higher than the category median.

 

Top 3

Top 5

Top 10

Franklin India Prima Plus Fund

43.89

56.48

71.18

Category Median

36.43

49.44

70.09

 

Company Concentration: The concentration of funds in top 3 companies is higher than the category median whereas the concentration in the top 5 and 10 companies in its portfolio is lower than the category median.

 

Top 3

Top 5

Top 10

Franklin India Prima Plus Fund

19.79

27.14

41.21

Category Median

18.69

27.5

44.45

 

Number of equity holdings: The fund currently holds 62 stocks in its portfolio (December 31, 2015), which is much lower than the median stock count for the diversified-equity category, which currently stands at 45. Thus, based on equity count the fund runs a highly diversified portfolio compared to its peer set. Over the past five years the fund has always had a diversified portfolio with the number of equity holdings over this period averaging 55.

Cash allocation: Its cash allocation at the end of December 2015 was 8.29 per cent which is on the higher side. The average cash allocation for last five years is 6.07 per cent. Its maximum allocation to cash over last two years was 9.65 per cent in June 2015 and lowest was 2.91 per cent in February 2014. In 2015 it had an average cash allocation of 4.26 per cent.

Portfolio Insights: The fund has exposure to a wide variety of sectors. However, the top 5 sector include Private Sector Banks, IT- Software, Pharmaceuticals, Refineries, Telecom and Auto, particularly Two Wheelers.

The fund’s exposure to cyclical stocks currently is 60.97% followed by Defensives with 12.67% and Services with 18.07%. The top five holding are HDFC Bank, Infosys, Bharti Airtel Ltd., ICICI Bank Ltd. and IndusInd Bank Ltd.

In the last six months the fund has bought Tata Consultancy Services Ltd., Bata India Ltd., State Bank Of India, Arvind Ltd. and Jubilant FoodWorks Ltd. It has sold its holding in Bosch Ltd., CRISIL Ltd., Petronet LNG Ltd., Bank Of Baroda and Nirvikara Paper Mills Ltd. in the last 6 months.

The current large cap exposure is 75%, mid cap exposure is 15% and small cap exposure is 6.5%.

 

Process

Franklin India Prima Plus invests for growth of capital primarily through a diversified portfolio of wealth creating companies across market capitalisation ranges. Wealth creating companies are defined as those, which have the potential to produce returns consistently in excess of their cost of capital. The ability to achieve this is derived from sustainable competitive advantages emanating from intellectual property rights, proprietary technologies, well known brands, sound business strategies, management quality and so on. Providing regular dividend is also an objective of the scheme and it has a regular track record of annual dividends. The fund has a large cap tilt.

At least 40% of the portfolio is mandated to be invested in equity securities. This is much lower compared to most diversified equity scheme mandates. The scheme can go up to 60% in debt and money market securities. The scheme may take exposure in derivatives up to a maximum of 50% of its AUM.

The scheme follows a blend of value and growth style of investing. The fund will follow a bottom-up approach to stock-picking and choose wealth creating companies across sectors.

The fund’s expense ratio is 2.30% which is slightly lower than the category average of 2.33%. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment in the fund is Rs 5,000.

 

Fund Manager

The fund is managed by Anand Radhakrishnan and R. Janakiraman.

Anand Radhakrishnan is Chief Investment Officer for Franklin Equity - India, Franklin Templeton Asset Management (India) Pvt Ltd. Mr. Radhakrishnan is responsible for overseeing all the local equity funds. His responsibility includes mentoring all the portfolio managers and also acting as portfolio manager for some key products. He manages Franklin India Bluechip Fund, Franklin India Prima Plus, and Franklin India Taxshield, Franklin India Infotech Fund, and equity portfolio of all hybrid funds. Mr. Radhakrishnan has been in the investment management industry since 1994. His past assignments include 8 years as fund manager for Sundaram Mutual Fund. He was also Deputy Manager in equity research with SBI Funds Management Ltd. Mr. Radhakrishnan holds a postgraduate diploma in management from Indian Institute of Management, Ahmedabad, and a bachelor of technology degree with a specialization in chemical engineering from Anna University, Chennai. He is a Chartered Financial Analyst (CFA) charterholder.

Janakiraman Rengaraju is Vice President, Portfolio Management- Equity for Franklin Templeton India AMC Ltd. Mr. Rengaraju manages Franklin India Flexi Cap, Franklin India Prima Fund, Franklin India Opportunities Fund and Franklin India Smaller Companies Fund. He is co-portfolio manager for Franklin India Prima Plus and Franklin India High Growth Companies Fund. Mr. Rengaraju has been in the investment management Industry for the past 14 years. Prior to joining Franklin Templeton, he managed the investment corpus of Indian Syntans Group, a Chennai based privately held group of companies. Before this, he worked for UTI Securities, Mumbai. Mr. Rengaraju holds an M.B.A. from the Indian Institute of Management in Bangalore and a bachelor of engineering from the Government College of Technology in Coimbatore. He is a Chartered Financial Analyst (CFA) charterholder

 

View

Franklin India Prima Plus has a consistent track record of beating the benchmark and category and has a good fund management team. It is not a very aggressive fund and tends to be in the second quartile with above average returns. It also strives to provide regular dividends which makes it a preferable option for investors who wish to get regular dividend. It takes high cash calls and by mandate can go heavy on cash (upto 20%). On the whole, it can form part of the multi cap allocation in your portfolio. 

 

To read the previous Citrus Analysis of Franklin India Prima Plus Click Here.

 
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