The Hindu Business Line : Franklin Prima: Invest in small lots

AN investment may be considered in Franklin India Prima Fund, as its performance continues to be top-notch. Its portfolio also holds promise of steady gains and is in a superior position to weather any downturn in the broad market.

Investments could be phased out over a six-to twelve-month period using the systematic investment plan. This would ensure that investors take advantage of any weakness or protracted period of flat trends in equity prices. The fund has an asset base of nearly Rs 1,700 crore.

Franklin Prima has outperformed its peers and indices by a long margin and done that consistently over the past ten years. It has maintained an impressive track record across different phases of the market. It figures among the top ten performers. That it has managed to maintain this status even as the asset base rose manifold over the past few years is significant.

It is the only fund with an asset base of over Rs 1,000 crore that has maintained a focus on mid-cap stocks. Prima was among the early funds to do focussed investing in this category and, to a lesser extent, in small-cap stocks. It has been the prime beneficiary of the several bouts of re-rating that stocks in the mid-cap space have enjoyed, especially since 2002.

Quite a few mid-cap stocks in its portfolio have made the transition to large-caps; they are in the fledgling stage in this category and, over the long term, could provide substantial upside. Stocks such as Indian Rayon, Great Eastern Shipping, IPCA Labs, MICO and i-flex solutions are a few examples. This shift in the portfolio could ensure that the downside risk is limited when equities go through a sluggish phase.

Suitability: The risk associated with the fund is line with what one associates with a diversified fund.

The returns have more than adequately compensated for the risk element. Franklin Prima ought to be one of the core holdings in a portfolio of funds.

It remains one of our preferred picks along with Magnum Contra, HDFC TaxSaver, HDFC Equity, Reliance Growth, Franklin Bluechip and HDFC Long-Term Advantage.

If you are interested in investing in the mid-cap space, a combination of Prima, HDFC TaxSaver (and/or HDFC Long-Term Advantage) and Sundaram Select Midcap would prove a value-enhancing set of funds. Investors could choose the dividend option and re-invest the payouts.

Fund facts: Franklin Prima was launched in December. It came into Franklin Templeton fold a few years ago.

The minimum investment is Rs 5,000. The entry load is 2.25 per cent. There is no exit load. Mr K. N. Siva Subramanian is the fund manager.

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