Templeton India Equity Income Fund: Invest:: Business Line,

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If you are looking to take limited exposure to international markets,then Templeton India Equity Income Fund (TIEIF) offers a good investment bet. The fund offers overseas equity exposure to sectors under-represented in the Indian market and has a value-based investing approach with a focus on high dividend-yielding stocks. Both these hold significant investment appeal in today's scenario.

The fund outperformed its benchmark BSE 200 comfortably over one-, three- and five-year periods. Investors, however, can consider phasing out their exposure to the fund by way of systematic investment plans, given the rich valuations of the domestic market as well as select emerging markets.

Performance: During a one-, three- and five-year period, the fund has managed to return nearly 11 per cent, 14 per cent and 17 per cent respectively beating both its benchmark as well as the Sensex. The fund's returns compare favourably over funds with global equity exposure, as well as ones focused purely on Indian stocks.

The fund also has an added edge over similar domestic funds, in terms of the bigger universe of ‘dividend-yield and value' stocks in overseas markets. A larger pool of stocks to pick up, besides lower valuations in emerging markets, may explain TIEIF's relatively superior performance over domestic funds such as Birla Sun Life Dividend Yield and UTI Dividend Yield during the past year.

The motley mix of global and local stocks (35:65), combined with its value-based investment approach has helped the fund deliver steady returns over the years.

While the exposure to overseas and domestic equities has helped it expand its investment universe , the value-based investment style appears to be shielding the fund reasonably well from market volatility; if the past year's return is any indicator.

Portfolio: The domestic component of the portfolio, which predominantly features large-cap stocks, currently makes up about 65 per cent of its portfolio. Of that, large caps account for about 41 per cent.

The fund sports select stocks from the mid- and small-cap genres as well (such as Sundaram Finance, Tata Investment Corp., and EID Parry). In terms of sector exposure, the fund now sports a high exposure to banks, financials, fertilisers and oil & gas. Interestingly, over the years, TIEIF's portfolio hasn't undergone a lot of change but for some periodical rebalancing.

The fund's overseas exposure is spread across markets such as China / Hong Kong, South Korea, Russia, South Africa and Taiwan. The relatively lower valuation levels in most of these markets provided the much-needed edge to the fund's portfolio.

At 31 per cent, the foreign equity exposure straddles sectors such as consumer durables (Samsung Heavy Industries), consumer non-durables (Pacific Corp, Embotelladora Andina SA), finance (IS Yatirim Menkul Degerler AS) and minerals and mining (Anglo American PLC) to name a few.