A fund you cannot ignore
Franklin India Bluechip's consistent performance and bent on quality definitely earns our endorsement.
With a nose for bottom-up stock picking and a conscious regard for valuations, fund manager Anand Radhakrishnan sticks to his relentless focus on long-term value. This trait sometimes results in a portfolio that deviates substantially from what others are betting on.
A prominent in-your-face example was his sector exposure in 2007. Despite momentum building up in three sectors: Metals, Power and Real Estate, Radhakrishnan steered clear of them. While heavily stretched valuations was the common factor in all, a ballooning subsidy burden and policy uncertainty made him uncomfortable with state-owned oil companies and power companies, respectively.
Valuations again made him cautious on Healthcare and Consumer Staples in 2011 though he is positive on both. According to him, the “exposure to Pharmaceuticals actually increased between January 2010 and December 2011 – combination of both, new purchases and rise in valuations. At the same time, we have been selective in Consumer Staples as the perceived defensive nature of these stocks had led to sharp increase in relative valuations in 2010/11.”
While he shuns steeped valuations on the one hand, he scouts for undervalued stocks on the other, displaying the traits of a contrarian. During the 2008 crash, he refrained from taking refuge in cash and went bargain hunting for banking stocks.
Here is a fund manager who sticks by his convictions and has no qualms holding on to stocks when they have strong fundamentals, even if they are out of current favour. His sectoral stances are grounded in fundamentals rather than a top-down view.
True to its name, the fund sticks to a large-cap mandate but is not biased towards any type of stocks and favours both, growth and value. In momentum-driven markets, the fund’s style could result in it lagging behind in terms of short-term performance but that is no reflection on its inherent character. Over the long-term, Franklin India Bluechip stands vindicated.
This fund features on the recommended list put up by Fundsupermart.com’s research team. For a detailed analysis on the portfolio and performance, click here.
Category: Equity – Large Cap
Strategy: To construct a diversified portfolio of large-cap liquid stocks with a long-term perspective
Stock selection: The companies must be good businesses that have sustainable competitive advantages; high management quality with good corporate governance standards; generate high ROCE and demonstrate the ability to deliver sustainable earnings growth