22 August, 2014 11:23 IST
News
Templeton India Growth Fund: Invest
Source: BUSINESS LINE (21-JAN-13)
Comments  |  Post Comment

Investors with a very conservative frame of mind and an investment horizon of at least five years can consider investing in units of Templeton India Growth Fund. The fund follows a strategy of buying and holding stocks for a longer period with a strong thrust on their valuation. Dividends have also been paid out consistently over a ten-year period.

With market valuations soaring over the past year - a result of poor earnings growth and a rapid rise of stock prices - a value-based approach may pay off now. The fund's portfolio PE multiple as December is about 17 times, at a slight discount to the Sensex's 18 times. The fund's PE has also remained steadier in the past three years than the Sensex's wider swings.

The fund may not give out the superlative returns of equity funds, but could protect risk of loss in a falling market. Barring 2011, the fund has managed to contain slide in NAVs during market downturns reasonably.

Performance: Over a one-year period, the fund has returned 26%, beating its benchmark's 20% by a wide margin. Over three- and five-year periods too, the fund has pushed past its benchmark.

On a five-year rolling return basis, though, the fund has bettered its benchmark only about 60% of the time, owing to its underperformance in 2011. Dividends have, however, been paid out during the poor years as well. But the fund's 9.1% SIP return over this period suggests that this may be an optimal route to invest in the fund.

Portfolio: The fund sports a limited portfolio of 25-35 stocks. Large-cap stocks currently dominate the portfolio at around 77%, with a fair share of mid-cap stocks and a limited presence in small-cap stocks. But given that the fund uses valuation parameters in stock picks, this proportion is liable to change.

That the fund prefers stocks out of favour and thus usually undervalued is evident from the lack of pure-consumer stocks and the inclusion of stocks from the fertiliser (11.4%), metals (1.9%), and oil (4.8%) space.

The fund caught the wave of private sector banks rather early, gradually building stake in the sector November 2011 onwards, while booking out of stocks in public sector banks in February 2012.

There are no holdings in stocks of FMCG or retail companies, whose valuations have skyrocketed in the past year. It does have a measure of the consumer angle in picking good performer Maruti Suzuki and telecom stocks such as Bharti Airtel and Idea Cellular. Among tyre stocks, the fund added dark horse Balkrishna Industries, which has turned out to be a good performer. The fund has a defensive play in pharma stock Dr Reddy's Labs.

Taking advantage of their recent good run, the fund recently exited the stocks of Reliance Infrastructure - in which it had been slowly increasing stake from mid-2010 onwards - Usha Martin and Tata Steel. These stocks, along with Union Bank of India, were partly to blame for the poor performance in 2011.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.




News
'Buy' Supreme Infra; target Rs 411: Kantilal Chaganlal - 22-Aug-2014 10:58
Karur Vysya Bank closes QIP issue - 22-Aug-2014 10:57
Arvind inks pact with Gap to stores in India - 22-Aug-2014 10:40
L&T bags water project orders worth Rs 12.83 bn - 22-Aug-2014 09:49
KNR Constructions bags project worth Rs 684 mn - 21-Aug-2014 19:11
Karvy reiterates 'Buy' on Mangalam Cement - 21-Aug-2014 18:18
Ujaas Energy commissions roof top solar PV power plant in UP - 21-Aug-2014 17:49
HDFC allots shares under ESOS - 21-Aug-2014 17:12
NEST enrolls more than 1 mn members on TCS BaNCS - 21-Aug-2014 16:10
Wipro expands strategic partnership with CA Technologies - 21-Aug-2014 15:20
'Buy' JSW Steel; target Rs 1,646: Motilal Oswal - 21-Aug-2014 14:21
more...
* Q - Quote , N - News , C - Chart , F - Financials
Comments Post comment 
 Post Comment
Name Email
Comment
Security Code type   zdxjy4 into this box
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Forums  |   E-mail  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer