A large-cap fund

FUND PICK/Franklin India Bluechip

Franklin India Bluechip is the only pure large-cap diversified equity fund available today. The fund is available at an entry load of 2 per cent and a minimum investment of Rs 5,000.

Performance: In its nine full calendar years of existence, the fund has outperformed the benchmark Sensex in eight years and garnered the top quartile standing in six years.

The combined result of this is 10-year annualised returns of 27.84 per cent which no diversified fund can match.

Portfolio: Franklin India Bluechip doesn't go overboard on any particular sector and remains unperturbed by sudden developments. Thus when Infosys fell in April this year, the fund did not lose its nerve.

Rather, it continued to buy the stock all the way down. As the stock rebounded, the fund has benefited tremendously. It has been a similar case with HPCL where the fund has not pressed heavy sales and is maintaining its sector weightage.

Mutual fund investors have taken notice of this, and the fund has crossed 1,000 crore of assets, becoming the third largest open-end equity fund in the country.

The size can become a cause for concern except that the scheme is purely into large caps and so the impact cost on transaction should be low. Even in the mid-cap driven rally of 2002, the fund stuck to large caps.

When mid-cap bank stocks were the flavour of the season, the fund managed to perform with SBI and ICICI Bank. It did not panic when disinvestment was put on a three-month hold and instead added energy stocks. This, too, has served the fund well.

The fund has managed bear markets well. In 2000, large cap IT stocks were relatively less hurt. And non-IT stocks like ITC, HDFC and Ranbaxy helped cushion the impact of a falling market.

In 2001, too, when markets crashed, the fund nearly mirrored the index's returns.

In September 2001 (post-9/11), it lost 16 per cent. But in the last quarter of 2001, the fund was able to make up for the lost ground.

This was due to the recovery made by some of its top IT holdings-such as HCL Technologies and Infosys and a rally in cement and auto stocks like ACC and Hero Honda.

Outlook: Franklin India Bluechip is one of the best choices for equity fund investors looking at a pure large-cap portfolio. Though it may not be at the top of the heap at the moment, its long-term performance is impeccable.