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S. Vaidya Nathan

INVESTORS in the Templeton Monthly Income Plan (Growth Option) can stay with the Fund for now, despite its rather unimpressive performance. With equity exposures of around 12.9 per cent in its portfolio, the fund has not delivered the kind of returns to compensate for the enhanced risk element.

Since its launch in February 2000 (a bad time to take equity exposures), the fund has turned in returns of 9.7 per cent. Last year, the returns were around 11 per cent. In the last two-and-a-half years, bond prices had a good run due to the steady decline in interest rates. Despite this, the returns have not been impressive. Investors may thus look for better options, though it may be better to wait a while and cut exposures when equity prices improve. There is also a possibility of a bond price rally as one more interest rate cut may be effected in the next two months.

Investors could then switch to a pure debt fund's growth option to avail of better rates. Fresh exposures can be avoided in the Growth Plan as well as Half Yearly Dividend Plan whose portfolio mirrors that of the Growth Plan, given the rather unimpressive performance of the schemes so far.

<>Suitability>: The Templeton MIP (Growth Option) would be appropriate for investors looking for regular returns and some incremental returns through its equity exposure. The risks attached are higher than a portfolio of only debt instruments. But even investors with such a profile can contemplate paring exposures when market conditions improve in the wake of the modest track record.

<>Portfolio>: The Growth Plan's portfolio has 12.9 per cent in equities. The fund has a diversified portfolio, in line with Templeton's equity approach. The fund has 63.5 per cent in corporate debt, perhaps due to the cumulative nature of the scheme and to capitalise on the spreads.

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