This 16-year fund invests in wealth creating companies across sectors and market caps. The fund has an average, but safe, performance history. Over the past 15 years, it has been the best-performing among its peers, giving an annualised return of 26 per cent.
The downside protection capability of this fund is legendary. In 2007, fund manager Sukumar Rajah stayed away from power stocks and entered metals only in October, despite the rally in these sectors. Rajah agrees this impacted performance, but believes the stringent screening mechanisms had checked exposure to momentum-based sectors. The move paid dividends in 2008, when these sectors were worst hit. Despite being fully invested in 2009, the fund failed to match up to peers.
Rajah stays away from momentum play and invests in stocks that perform well over market cycles. This has helped the fund protect its investors during market downturns. But has also resulted in a subdued performance in market rallies. "We adopt a buy and hold strategy, in-line with our mediumto long-term view on a company. Shortterm trades made are in-line with the overall strategy and driven by changes in market and relative valuations," says Rajah, MD & CIO - Asian Equities, Franklin Templeton Investments.
The fund mainly invests in largecaps but takes exposure to mid- and small-caps to boost returns. Retaining gains made in bull phase and staying invested irrespective of market conditions, suits investors with moderate risk profiles and those planning to build a long-term portfolio. But, those who expect mid- and small-cap exposure to prop-up overall returns will find largecap bias to be a damper.
