The fund prefers to stick to quality IT scrips. | |
| Franklin Infotech was launched in August 1998. The fund charges an entry load of 2.25 per cent. The minimum initial investment is Rs 5,000. |
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| After a series of disappointing years, the fund returned 30 per cent in 2004. Except for a marginal underperformance in Q3, it put up a consistent show throughout the year to beat the category. A judicious mix of large- and mid-cap stocks during H1 and a large-cap dominated portfolio later helped the fund generate better returns. |
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| Stocks like E-Serve International (the fund exited from the stock in July 2004), Wipro and Infosys proved rewarding. TCS was among the fund's top five holdings, commanding nearly 10 per cent of assets. The scrip has appreciated more than 35 per cent after being listed in August 2004. |
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| Historically, the fund had been an average performer. From 2000 to 2002, it managed to closely follow its average peers. |
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| In 2003, however, it failed to capitalise on the mid-cap rally despite having a good exposure (an average 37 per cent) to mid-cap scrips - it finished in the bottom quartile of the category with a return of 37.43 per cent. |
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| The fund believes that investing in big companies is the safe means to manage volatility in the tech sector. It seems to have developed a liking for Infosys - on many occasions, the stock has made one third of its portfolio. |
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| However, the huge tilt towards one stock is a concern. In fact, this strategy cost the fund heavily in H1 2003, when Infosys' share price crashed. However, again the fund 's faith in the stock worked in its favour - it gained the most in the later half of 2003 when Infosys revised its revenue guidance upwards. |
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Volatility remains a concern. The concentration to Infosys and a portfolio spread over just 15-18 stocks wouldn't help the fund curb it. But risk and volatility are part of any sectoral fund.
| Top holdings | | As on March 31, 2005 | Value
(Cr) | Net
Assets
(%) | | Infosys Technologies | 48.43 | 32.27 | | Tata Consultancy Services | 28.57 | 19.03 | | HCL Technologies | 15.19 | 10.12 | | Satyam Computer Services | 12.54 | 8.36 | | Flextronics Software Systems | 9.88 | 6.58 | | Wipro | 7.99 | 5.32 | | Patni Computer Systems | 7.80 | 5.19 | | i-flex solutions | 5.31 | 3.54 | | Hexaware Technologies | 4.39 | 2.93 | | Infotech Enterprises | 4.16 | 2.77 | | CMC | 3.84 | 2.56 | | Planetasia.Com | 0.02 | 0.01 |
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| A large-cap dominated portfolio makes the fund special. It could prove to be useful over the long run. -Value Research |
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| Returns in % as on April 14, 2005
The performance of equity funds has taken a hit in the past month, as markets went on a tailspin.
Equity categories
Average category returns | | | 1 year | 1 month | | FMCG | 43.76 | 0.28 | | Technology | 33.12 | -2.90 | | Banking | 33.02 | -7.99 | | Tax Planning | 32.41 | -3.81 | | Diversified | 25.74 | -3.75 | | Pharma | 21.05 | -4.97 | | Index | 8.79 | -5.26 | | Petroleum | -1.95 | -4.2 | | Auto | - | -4.39 |
Only FMCG sector funds managed to post positive returns and that too only marginally. Returns look much better over the one-year period.
Leaders
Balanced funds | | | 1 year | 1 month | | SBI Magnum Balanced Fund | 31.76 | -2.44 | | BoB Balanced Fund | 27.68 | 2.34 | | HDFC Prudence Fund | 26.76 | -0.65 | | Tata Balanced Fund | 26.05 | -2.09 | | Kotak Balance | 24.58 | -1.88 | | Prudential ICICI Balanced | 20.21 | -2.61 | | GIC Balanced Fund | 20.07 | -2.36 | | Alliance 95 | 18.38 | -1.6 | | Escorts Balanced Fund | 17.81 | -3.89 | | Principal Balanced Fund | 17.72 | -0.9 |
Balanced funds have performed similarly to that of equities. While leading balanced funds have recorded returns in the region of 25-30 per cent over the past one year, their one-month returns have been mostly negative, save BoB Balanced Fund, which managed a positive return of 2.34 per cent.
| Laggards
Balanced funds | | | 1 year | 1 month | | Can Balanced | 3.40 | -3.04 | | Escorts Opportunities | 6.47 | -3.91 | | LIC Balanced | 7.35 | -3.77 | | Birla Balance Fund | 8.44 | -3.35 | | JM Balanced | 8.94 | -2.64 | | FT India Balanced Fund | 12.14 | -1.84 | | ING Vysya Balanced Fund | 12.17 | -4.00 | | HDFC Balanced Fund | 15.00 | -2.26 | | UTI Balanced Fund | 15.26 | -2.51 | | DSP ML Balanced Fund | 15.86 | -2.84 | | Source: www.mutualfundsindia.com |
The higher allocation to equities has forced balanced fund returns to sink or swim along with the general equity market sentiment. Leading balanced fund performers have an equity exposure of 60-65 per cent currently. |
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