To protect during downturn

FRANKLIN INDIA PRIMA PLUS

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.

Period	Return (%)
3-month	-10.87
6-month	0.40
1-year	10.37
3-year	3.88
5-year	16.30

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 medium- to long-term view on a company. Short-term 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 large-caps 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 large-cap bias to be a damper.

HDFC TOP 200

This fund invests in stocks drawn from the companies in the BSE 200 Index, as well as India’s 200 largest capitalised companies. With equity exposure up to 90 per cent, it has managed to achieve capital appreciation over time. The fund has a solid long-term record and has been the best performer over five years, with over 23 per cent returns.

Period	Return (%)
3-month	-11.97
6-month	1.58
1-year	16.39
3-year	10.19
5-year	19.23

It has consistently proven itself in 14 years, barring 1999, when the high exposure to fast moving consumer goods (FMCG) and healthcare backfired in the tech-dominated rally, and between June 2007 and January 2008. The fall in 2007 was due to offloading energy. The fund also missed the realty and utilities boom in this period. The fund manager stayed away from realty as he didn’t understand the business.

In 2008, the fund's success in standing in a bear market, without debt or high cash levels, was a testimony to the manager's skill. Large-cap bias and exposure to FMCG and healthcare restricted the fall to 45 per cent (11 per cent less than BSE 200) and 8 per cent lower than the category. It was in 2009 that the manager outperformed the category by 14 per cent. He was overweight on auto and banking, his bet on SBI paid handsomely. He also reduced exposure to power utilities and energy, and reduced exposure to RIL.

Investors may fret occasionally but the fund has a knack of rewarding investors who stick with it. The portfolio of 60 stocks is logical, given its size.

UTI EQUITY

The fund was launched in May 1992 as a closed-ended scheme and was welcomed by investors, raising Rs 4,472 crore with its new fund offer. The fund turned open-ended in January 1997, with an objective of investing at least 80 per cent in equity and equity-related instruments with medium- to high-risk profile, with the remaining 20 per cent in debt and money market instruments with a low- to medium-risk profile.

Period	Return (%)
3-month	-11.02
6-month	3.17
1-year	12.14
3-year	7.51
5-year	13.29

The fund has had both good and bad years. But its performance over the past three years has brought it back into the limelight. It has delivered an annualised return of 8.74 per cent over the three-year period ending January 31, 2011. After an exceptional run between 2002 and 2004, the fund faltered in the next three-year cycle. A lot changed in the fund's performance after Anoop Bhaskar took over as the new fund manager in April 2007.

He started with a broad-based portfolio. The positioning and strategy of the fund was tightened by September 2007 and it was positioned as a flexi-cap product with not less than 70 per cent of the portfolio in large-cap stocks. Though it missed out on the initial part of the rally that started in March 2009, it made up with allocations in automobiles and increased exposure to technology stocks. Bhaskar’s bet on high beta names across infrastructure and oil and gas, and also focused on domestic consumption space.

This is a safe fund within the category. The fund remains invested in large-cap stocks for the long periods and sticks to safe bets in the mid-cap space. This makes the fund steady, which hardly ever throws any surprises. For those looking for safety in this category, this is the fund to stay put for the long term.