Franklin India Bluechip - INVEST ::Business Line

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Investors can buy the units of Franklin India Bluechip (Franklin Bluechip), a fund with a long track record of consistently delivering benchmark-beating returns.

Over one-, three- and five-year timeframes, the fund has outperformed its benchmark – the Sensex — by 5-7 percentage points.

With a long history of over 18 years in existence, the fund has consistently been delivering steady returns.

In the last five years, Franklin Bluechip delivered compounded annual returns of 12.6 per cent, which places it among the top quartile of diversified equity funds and among the very best in the large-cap category.

These returns are better than peers', such as Birla Sunlife Frontline Equity and IDFC Imperial Equity.

Over the last three years, the fund has further strengthened its performance and delivered 26.1 per cent returns, which is better than the above funds as well as DSPBR Top 100 Equity.

With a large-cap stocks focus, generally leading to a lowering of risk profile and with a consistent value based approach, Franklin Bluechip would be a suitable addition to the core portion of investors' fund holdings.

Investors can also take exposure to the fund through the SIP (systematic investment plan) route for building a corpus over the long-term.

In each of the last five years starting 2007, it has managed to outpace its benchmark as well as its category average consistently.

In the volatile markets prevalent over the past four years, Franklin Bluechip participated well in the rallies and contained downsides better than the Sensex.

PORTFOLIO AND PERFORMANCE

Over the past couple of years, banks and software have consistently been the top sectors held by the fund.

Bank stocks continue to be reasonably valued, a sustainable outlook for outsourcing and rupee depreciation over the past one year have ensured that the software sector remains a key holding in the fund.

Franklin Bluechip also manages to identify sectors that are beaten down in the markets and pick the outperformers from these.

Testimony to this is the fact that the fund increased exposure to telecom stocks, figuring among the top few, over the past 12-18 months.

Idea Cellular, a key pick, has managed to deliver heavy outperformance in a falling market.

That the fund takes a value approach is also evident from its reducing exposure to the expensive consumer non-durables sector.

Across market cycles, Franklin Bluechip has remained invested fully in equity, with cash levels increased to the extent of only about 8 per cent of the portfolio during heavy market falls.

The fund has generally sought to de-risk its portfolio by including a large number of stocks.

This typically varies from 40-45. Individual stocks, barring 2-3 of them, account for less than five per cent of the overall portfolio.

Within sectors, there are some interesting instances of stock churning.

So, over the last one year, HUL is out of the portfolio, while ITC makes a comeback. TCS is shown the door, while Wipro makes an entry and GSK Pharma was included, even as Lupin was exited.

The “central theme” running across these instances is the stress on valuation as the key indicator for buying and holding a stock in the portfolio. This approach has helped it post sustainable returns.