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Aarati Krishnan

TEMPLETON India Growth Fund may be a good investment option for conservative equity investors. The fund has consistently delivered better returns than the index, while staying with large-cap stocks. It is also among the few equity funds to weather bearish market phases well, making it suitable for investors with a conservative profile.

Investors could use the systematic investing route to take exposures to the fund. This could reduce (but will not do away with) the downside risks associated with any short-term corrective phase in the market.

Suitability: A preference for conventional frontline stocks and a good record of containing declines in its NAV to levels lower than that of the market, make this fund a relatively low risk option within the basket of equity funds.

The fund also follows a less aggressive investment strategy than its peers, with its portfolio turnover consistently lower than most equity funds. But the flip side to the fund's leaning towards conventional large-cap stocks is that it could lower the return potential. Over the past year, the fund has trailed considerably its more aggressive peers which have been active in the mid-cap space.

Performance: The fund figures in the top quartile among equity funds based on its five-year record, because of its impressive performance in 2000 and 2001, when most equity funds shed considerable value.

Over a three-year time-frame, with a compounded annual return of about 42 per cent, the fund has been outpaced by diversified equity funds such as HDFC Top 200 Fund, Reliance Growth and Reliance Vision.

However, its consistent record of delivering reasonable risk-adjusted returns sets it apart from most other funds. This may be a valuable attribute going forward as the stock market pauses for breath after the impressive run-up over the past couple of years.

The fund's portfolio choices have usually been non-adventurous — predominantly in large-cap stocks, either from the index or the A group. The fund takes focussed exposures in its top five holdings and invests in just one or two prominent stocks from each sector.

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