Sunday, March 28, 2010

Franklin Bluechip Fund - Invest

Srividhya Sivakumar

Long-term investors can consider adding Franklin India Bluechip Fund to their portfolio.

Though the fund hasn't been among the top performers in recent years, its strong large-cap focus and consistent scorecard over the years makes it a worthwhile investment proposition for conservative investors.

It has delivered a return of over 89 per cent in the past year.

While this is only a shade above the diversified fund category average, it is comfortably ahead of its benchmark, BSE Sensex.

Investors may, however, note that the fund's strict large-cap focus could contain its participation in broad-based bull rallies in future, as it has in the past.


The fund returned over 16 per cent and 25 per cent annually, over a three and five-year period.

It beat both the category average as well as the Sensex by a decent margin during both these periods.

With the rally being broad-based, the fund missed out on opportunities in the small and mid-cap space, which many of its peers in the diversified funds category used to their advantage.

That said it appears to have delivered better when compared with similar large-cap focussed funds such as SBI Bluechip and DSPBR Top 100 over the year.

Not only did it beat both these funds by more than a 10 percentage points margin, its returns are also comparable with that of BSL Front Line Equity.

A combination of good stock choices within the large-cap universe and considerable equity exposure, in spite of the market crests and troughs have resulted in its improved performance.

Additionally, though a very short-time frame to measure performance, that the fund has returned better than most large-cap focussed peer funds in the last six-months also suggests improving prospects.

The fund's performance during periods of market corrections may also appeal to conservative investors.

For instance, in the market carnage of 2008, with a negative return of 48 per cent, the fund was among the handful that managed to arrest losses better than the Sensex.


Franklin Bluechip takes focussed exposure to stocks; the top 10 stocks account for over 48 per cent of the assets.

While its large-cap bias may explain this, it also leaves the fund's returns largely dependent on the quality of its stock picks. The fund also does not seem to churn its portfolio as much as its peers do.

In recent months, while it exited stocks such as Areva T&D India, Hindustan Zinc, and newly listed stock NHPC, it added others such as Sterlite Industries, NTPC, and State Bank of India. the portfolio, however, appears diversified across sectors, save for its high exposure to banks. Interestingly, the fund seems to have latched on to the sector early on, in late 2008 itself.

In terms of other sectors, its latest portfolio has fairly high representation from software, capital goods, and telecom too.

Source : BL

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