ENDORSING the conservative stratagem of investing, Templeton India Equity Income Fund is designed to invest in companies that have current or potentially attractive dividend yield both in India and overseas markets. It is thus one of the few schemes in the country to give the investor a global exposure in investments. Launched in May 2006, the scheme now manages an asset base of over 1,100 crore.
PERFORMANCE:
Benchmarked to BSE 200 equity index, Templeton India Equity Income has so far turned out to be an outperformer in both good and bad times. The very first year of its launch — 2006 — saw the fund beat its benchmark by a neat 7% margin. The fund returned about 18% gains during the first seven months of its launch against 11% returns by the BSE 200.
While it did appear to slow in pace vis-à-vis its peers in one of the most happening years of the decade, 2007, generating about 57% returns in that year against over 60% hike recorded by the BSE 200, Templeton India Equity Income was quick to salvage its gait in the following years.
While the financial meltdown of 2008 saw the fund's assets wane by about 52% against BSE 200's 56%, the recovery period of 2009 saw the fund bloom with more than 104% gains against BSE 200's 88%. Even amid the volatile times of 2010, this scheme has been able to maintain its calm and return about 24% gains against BSE 200's 16%.
Thus, so far, the fund has earned about 115% absolute returns for its investors since the time of its launch against BSE 200's 72% absolute returns during the same period. This implies that every 1,000 invested into Templeton India Equity Income Fund in May 2006 is worth 2,150 now.
PORTFOLIO:
A brief review of the fund's portfolio since 2006 is bound to amuse one and all, for the scheme has hardly reshuffled the domestic composition of its portfolio ever since it was first incorporated in May-June 2006. The scheme currently has about 66% of its assets invested in Indian equities, diversified to incorporate about 23 odd stocks. Of these, nearly 83% of the stock composition is as old as 2006-07 and can thus be credited to have reaped in the gains of long-term investing for the investors. The only new entrants to the scheme are ING Vysya Bank, Coal India, MOIL, and Usha Martin.
It is also worth mentioning that while the fund's objective contemplates investment in stocks with good dividend yield, the fund's current portfolio does little justice to the stated objective. Except for stocks like HCL Infosystems, JK Cement and Gujarat Gas Company which have a reasonable dividend yield ranging from 3-7%, all other stocks holdings in the portfolio have dividend yields of less than 3%.
Notwithstanding the fact that Templeton India Equity Income Fund has more or less a static portfolio as far as domestic equities are concerned, the fund nevertheless appears quite active in managing its overseas investments. An international fund manager can be acknowledged to be a prime reason for such an investment activity. Templeton India Equity Income Fund is managed by the noted global investment guru J Mark Mobius.
OUR VIEW:
International investing has not found much favour with Indian investors so far, especially after the financial crisis of 2008. This is despite the fact that international funds are a catalyst to diversify investments geographically. Performance is another reason for the failure of these funds to
appeal to masses.
However, Templeton India Equity Income Fund's performance, so far, has been impressive. Moreover, its conservative approach towards investment, especially as far as domestic equities are concerned, makes it less risky and thus, suitable for investors who do not seek over-ambitious returns from their mutual fund investments. Those looking for some global exposure and diversification across boundaries should consider investing in Templeton India Equity Income Fund.
