Always on the prowl for right opportunities

Fund Analysis: Franklin India Opportunities

Franklin Internet Opportunities Fund was launched in February 2000 at the peak of the tech boom. Its investment universe covered e-commerce, dotcoms, Internet service providers and companies (banks, service sector) that used the Internet for business growth.

March 2004, it was repositioned as Franklin India Opportunities Fund with the mandate to invest in any opportunistic sector or stock. With a lot of steam still left in the bull run, there was no looking back. Its current 1-year returns of 6.07 per cent and 3-year returns of 45.08 per cent are way ahead of the category average of 3.15 and 38.60 per cent respectively.

Being an opportunistic fund, it changes its complexion quite rapidly. The fund manager will not adhere to any market cap and will go wherever he finds opportunities. Currently, 55 per cent of the portfolio is in mid- and small-caps.

The buy-and-hold strategy will obviously not be in sync with this fund's style and very few stocks are held on to for a considerable time frame. Currently, the fund holds a relatively small portfolio of 33 stocks with construction sector as its top holding, accounting for over 18 per cent of the portfolio. The aggressive nature of the fund can be gauged from the fact that stock of India Cements alone consumes 9.21 per cent of the portfolio. But this is how most of the opportunities funds are managed "" if they spot an opportunity, they don't mind investing aggressively in pursuit of high returns. And as the fund's performance record suggests, it has been pretty successful at that.

Looking at the pedigree of the fund house and fund manager, this one has the potential to come up with great ideas and deliver good returns. But this fund is not for the faint hearted. In a racy market it will do well but will get hammered in a sharp decline because its portfolio is full of sharp beta stocks.