The Hindu Business Line : Franklin India Prima Fund

SMALL or mid-sized companies have less probability of being identified by the market. The stocks of such companies with strong fundamentals offer scope for higher growth potential when spotted early. Mid-cap funds aspire to identify and invest in such relatively under-researched stocks.

We take a look at how Franklin Templeton India managed its Franklin India Prima Fund over October and November 2005. Franklin India Prima is an open-ended fund that aims at capital appreciation and income-generation. The fund's strategy is to invest in small and fast-growing companies.

As of November, the top 10 stocks in Prima's portfolio account for more than 40 per cent of its equity holdings. The top ten holdings have undergone a re-jig in the past two months. Gujarat Gas Company and FAG Bearings replaced Hindustan Construction and SRF.

In the textile space, Gokaldas Exports and SRF made a complete exit, while Aditya Birla Nuvo found favour through increased exposure. In the construction sector, holdings in Jaiprakash Associates remained unchanged over the period. Hindustan Construction saw a reduction of 1 per cent in weight in the portfolio.

Mphasis BFL was added to the fund's IT holdings. The stock accounted for 2 per cent of the asset value. Holdings in Patni Computer Systems underwent some trimming. CMC remained the sole representative of the hardware segment.

Shares held in the company rose by 200 per cent. Reduction in exposure to Gateway Distriparks resulted in a less than 5 percent holding in the transportation sector.

Auto ancillary stocks witnessed some churning. The fund made an exit from Rico Auto while Pricol and Sundram Fasteners were added.

Although the weight of pharma stocks remained unchanged, the segment moved to the second spot in terms of sector-wise allocation of Franklin Prima. The fund increased its holding in Abbot India and IPCA laboratories. The percentage of equity holding declined from 95.8 per cent in September to 89.9 per cent in November.

: Franklin Prima was launched in 1993 and had assets worth Rs.2107 crore as of November 30, 2005. Mr K. N. Siva Subramaniam and Mr Satish Ramanathan are the fund managers.

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