• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Suresh Krishnamurthy

INVESTORS in the scheme of Franklin India Dynamic PE Ratio fund can continue to stay invested. The fund's performance is impressive; it has delivered higher returns than what you would have earned if 75 per cent of your money had been parked in Franklin India Bluechip and 25 per cent in Templeton India Income Fund.

Such higher returns deliver significant value to investors given that investors would have saved on costs and taxes. This prima facie justifies the need for a fund of funds. Good performance from large-cap stocks and an improvement in returns from debt funds may contribute to improved returns from this fund.

In terms of absolute returns, the fund has also managed to keep pace with balanced funds in the period since its launch in October 2003. In terms of risk-adjusted returns though, the fund's performance trails that of other balanced funds from the stable of Franklin Templeton. It is, however, early days for the fund and its performance needs to be tracked longer before accepting or rejecting the investment strategy.

Franklin India Dynamic PE Ratio Fund is a Fund of Funds that invests in Franklin India Bluechip and Templeton India Income Fund. The proportion invested in Franklin India Bluechip each month is decided by the PE ratio of the Nifty Index. Dynamic PE Ratio is an aggressive fund. The fund would reduce the exposure to equities to 50 per cent or lower only when the PE ratio of Nifty rises to above 20.

With the PE ratio of the index hovering between 12 and 16 for the whole of 2004, the fund can invest 70-90 per cent in Franklin India Bluechip and the rest in Templeton India Income Fund. Franklin India Bluechip and Templeton India Income Fund are among the best available exposures in their class. Both funds are conservatively managed.

Performance: In 2004, the fund registered returns of 21.4 per cent. This was far higher than that of other balanced funds from the FT India stable.

In 2005, till date, the fund has recorded negative returns of 3.5 per cent while other balanced funds managed to record substantially superior performance.

In the one year to February 2005, the fund has delivered returns of 21.5 per cent. Franklin India Bluechip delivered returns of 24.9 per cent and Templeton India Income earned 1.1 per cent for the same period. Investment of 75 per cent in Bluechip and 25 per cent in the Income Fund would have delivered returns of about 19 per cent.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Open offer for ACC: Accept; Buy at lower levels

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line