First emerging market fund from Franklin

Franklin Templeton on Monday launched the country's first-ever emerging market fund. The fund "" Templeton India Equity Income Fund (TIEIF) "" seeks to provide a regular income and long-term capital appreciation by investing primarily in stocks that have attractive dividend yield across a spectrum of emerging markets.

"We will focus on stocks that provide dividend yield higher than the BSE 200 dividend yield," said Chetan Sehgal, director-research, Franklin Templeton.

"We would be primarily focusing on emerging markets since they are cheaper than developed markets," he added. Franklin Templeton has been managing emerging market equities since 1987.

Sehgal said dividend income, globally, does matter as it constitutes a significant portion of the total returns of major indices. Dividends account for nearly 40 per cent of the total returns that investors receive in the case of MSCI Emerging Market index.

In comparison, the dividends as a proportion of the total returns constitute only 27 per cent. This clearly favours the option of investing in equity abroad for dividend, as it would provide stability to overall returns.