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Franklin India Growth Fund another non-performer?

Aabhas Pandya

It seems the Indian equity markets are jinxed for the Templeton Asset Management Company. After a disastrous performance by the value-oriented Templeton India Growth Fund since inception in 1996, the NAV of the recently launched Franklin India Growth Fund has gone below par and touched a low of Rs 9.55 on March 16, 2000.

FIGF was launched in January this year and went open-end at a NAV of Rs 10.34 on February 21, 2000. The fund's NAV fell sharply after technology stocks came under selling pressure earlier this month. The NAV has now recovered, albeit marginally to Rs 9.88 on March 22 and is up 8 paise from its inception level of Rs 9.80 (the fund had charged a 2 per cent entry load). It is early days for the fund and a bit premature to evaluate the fund's performance. But till now the fund has been plainly unlucky as compared to other equity and sector funds launched in recent months.

A broadly diversified growth fund, The Rs 40 crore FIGF is spread across software, FMCG, pharma, commodities, media, auto, industrial conglomerate, consumer finance, etc. The top 10 stocks of the fund's portfolio are Satyam Computer, Infosys Technologies, HLL, DSQ Software, Apollo Tyres, German Remedies, Cadbury's, Dr Reddy's, Grasim and Zee Telefilms. Although stock-wise weightage is not available, it is evident from the portfolio that the ICE sector carries the maximum weightage in the portfolio. Unfortunately for FIGF, it has gone open-end at a time when there has been an across-the-board, brisk selling on the bourses.

In the case of Templeton India Growth Fund, the AMC had to compromise on its traditional bargain hunting value investment philosophy following peer pressure and its depressing performance with the NAV touching a low of Rs 6.90 in December 1998. In fact, the NAV remained below par for almost 20 months between November 1997 and July 1999.

The fund brought about a change in its investment strategy sometimes in December 1998 when it bought Ranbaxy Laboratories and Satyam Computer. Till then, the fund was only invested in out-of-favour cyclical stocks, awaiting a turnaround in their prices.

The fund changed track to assume aggressive position in software stocks, which is now the top sector with a weightage of 33 per cent as of February 29, 2000. TIGF has a 22 per cent exposure in Satyam, 8 per cent in HCL Technologies and 3 per cent in Hughes Software. It shows with a 114 per cent gain in the last 12-months, which has also taken the total return to a respectable 15 per cent annualised since launch.

Source: Value Research

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