FUND PICK: Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund, is ranked in the top 30 percentile (CRISIL Fund rank 1 or 2) in the past 10 quarters, aims to achieve capital appreciation through investments in Indian companies/sectors, which tend to grow earnings at a fast pace and offer the best trade-off between growth, risk and valuation. To achieve this, it follows a blend of top-down (macro analysis to identify sectors) and bottom-up approaches (micro analysis to pick stocks within these sectors).

 

The fund has outperformed both its benchmark (CNX 500 Index) and the category (average performance of diversified equity schemes, defined under the CRISIL Mutual Fund Ranking) across various time frames. The fund has outpaced its benchmark as well as peers during bear and bull phases, except during the global financial crisis of December 31, 2007 to March 31, 2009 (albeit marginally).

 

A lump-sum investment of Rs 1,000 in the fund at the time of its launch would have grown to Rs 2,891 by June 17, 2015 (annualised returns of 14.39 per cent) vis-à-vis Rs 2,316 (annualised 11.22 per cent) in the peer group and Rs 1,736 (annualised 7.23 per cent) in the benchmark. Likewise, similar results are observed in case of a monthly systematic investment plan (SIP). For instance, an Rs 1,000 SIP in the fund has delivered 16.39 per cent, 38.60 per cent and 27.72 per cent return in one, three and five years, whereas a similar investment in the CNX500 Index has returned -1.21 per cent, 17.82 per cent and 13.32 per cent, respectively.

Notably, although the fund has higher exposure to small and mid-cap stocks of 47.24 per cent as against the peers 33.61 per cent, it has managed to deliver lower volatility (Standard Deviation-Fund's is 15.69 per cent and Category is 17.45 per cent).

The fund's outperformance over its benchmark and peers is due to superior stock selection and right sector calls as seen in the table below.

 

Exposure to high performing stocks such as Amara Raja Batteries, Tech Mahindra, Mindtree, JK Lakshmi Cement and TVS Motors are top contributed to the fund's higher performance.