Since, Franklin India Prima Plus predominantly invests in large-cap stocks with an opportunistic allocation to mid-caps (15%-20%), the fund house had an option to categorise the fund under one of the following categories – Large Cap Fund, Multi Cap Fund or a Large & Mid Cap Fund.

Franklin India Bluechip Fund already held the Large Cap category, therefore, this option was ruled out. The Large & Mid Cap Fund category requires a minimum investment of 35% to mid-cap stocks, hence, the Franklin India Prima Plus fund's investment strategy would be altered.

Thus, the nature of Franklin India Prima Plus was best suited as a Multi Cap Fund.  Under this category, the mutual fund scheme can invest across large cap, mid cap and multi cap stocks. There is no minimum investment required towards any market cap. The scheme name and category changes will come into effect from June 4, 2018.

For the entire list of scheme names changes, do read: Your Mutual Fund Scheme Renamed. What Should You Do?

Given this mandate, Franklin India Prima Plus can remain predominantly invested in large-cap stocks and continue to take tactical allocations to mid-caps, as and when required. While the scheme has not spelled this out in its Investment Strategy published in the Addendum , it is likely to stick to its existing investment approach. Hence, investors should not be worried with the change in scheme name.

In terms of performance, Franklin India Prima Plus has not disappointed. It is among the top ranking schemes in the category based on its past returns. No wonder, the scheme is among the few equity funds that have garnered a corpus above Rs 10,000 crore. However, over the recent few years, the large-cap oriented fund has found it difficult to outperform its broader benchmark – the Nifty 500 index.

In this brief analysis, we take a close look at the features and performance of Franklin India Prima Plus.

Investment Objective of Franklin India Prima Plus (Franklin India Equity Fund)

Franklin India Prima Plus has an investment objective to "to provide growth of capital plus regular dividend through a diversified portfolio of equities, fixed income securities and money market instruments."

The new fund, Franklin India Equity Fund will follow the same investment objective.

Franklin India Prima Plus Details

Fund Facts

Category	Diversified	Style	Blend
Type	Open ended	Market Cap Bias	Multi-cap
Launch Date	29-Sep-94	SI Return (CAGR)	18.72%
Corpus (Cr)	Rs 11,848	Min./Add. Inv.	Rs 5,000 / Rs 1,000
Expense Ratio (Dir/Reg)	0.98% / 2.28%	Exit Load	1%

Portfolio Data as on April 30, 2018.
SI Return as on May 16, 2018.
(Source: ACE MF)

Under normal circumstances, Franklin India Prima Plus allocates…

• 40% - 100% to equity and equity related securities

• 0% - 40% to debt instruments

• 0% - 20% to money market instrument

From June 4, 2018, the new scheme Franklin India Equity Fund will allocate –

• 65% - 100% to equity and equity related securities

• 0% - 35% to debt and money market instruments

Growth Of Rs 10,000, If Invested In Franklin India Prima Plus 5 Years Ago

Franklin India Prima Plus : Year-on-Year Performance

Franklin India Prima Plus : Performance Vis-à-vis Category Peers

Rolling Period Returns

Scheme Name	Corpus (Rs Cr)	1 Year	2 Year	3 Year	5 Year	Std Dev	Sharpe
Kotak Select Focus Fund	19,228	22.87	19.65	15.96	21.52	12.95	0.15
Axis Focused 25 Fund	3,714	28.22	20.45	15.66	17.98	14.45	0.19
JM Core 11 Fund	35	26.63	24.60	15.52	19.28	18.45	0.13
SBI Large & Midcap Fund	2,319	21.66	16.41	14.59	20.45	14.05	0.11
IDFC Classic Equity Fund	2,889	24.54	20.54	14.45	16.41	13.71	0.13
Invesco India Growth Opp Fund	484	25.59	17.64	13.83	19.11	12.85	0.15
SBI BlueChip Fund	19,088	17.98	15.41	13.69	19.24	11.75	0.12
Franklin India Prima Plus Fund	11,848	17.54	14.49	13.38	19.48	11.83	0.09
Motilal Oswal Focused 25 Fund	1,080	21.57	15.60	13.34	16.61	13.33	0.08
IDFC Focused Equity Fund	1,561	35.82	21.64	12.56	15.07	14.12	0.13
Reliance Large Cap Fund	9,833	24.15	16.93	12.43	18.46	13.96	0.09
DSPBR Focus Fund	2,961	16.90	14.41	12.33	17.28	13.87	0.07
Aditya Birla SL Frontline Equity Fund	20,451	19.03	16.26	12.09	18.35	12.54	0.09
Indiabulls Blue Chip Fund	395	20.78	16.59	12.01	14.20	14.33	0.13
HDFC Growth Fund	1,181	22.76	18.42	11.93	15.16	14.35	0.11
ICICI Pru Focused Bluechip Equity Fund	17,142	21.39	17.25	11.86	17.44	12.24	0.11
Aditya Birla SL Top 100 Fund	4,212	19.30	16.12	11.81	18.60	12.58	0.09
Kotak Classic Equity Scheme	334	23.51	17.36	11.35	16.03	12.72	0.12
Invesco India Largecap Fund	142	18.06	13.86	11.23	16.32	11.79	0.09
Reliance Vision Fund	3,378	23.66	16.22	11.21	17.31	14.65	0.02
NIFTY 500 - TRI		23.53	18.00	12.06	16.53	13.76	0.12

Returns are on a rolling basis and those depicted over 1-Yr are compounded annualised.
Data as on May 16, 2018
(Source: ACE MF)

*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

Franklin India Prima Plus has maintained a decent lead over the benchmark in the 3-year and 5-year periods. In fact, in the 3-year periods, it is among the top performing large-caps oriented funds. In the 1-year and 2-year periods, the performance of the scheme has faltered.

In the 1-year period, while most of the funds generated a return in excess of 20%, Franklin India Prima Plus generated a return of around 17%. Again in the 2-year periods, the return of the fund was around 14%, while most other schemes generated a return of two percentage points higher. Not to mention, the scheme underperformed the benchmark in these periods.

However, what many may miss is that, though the returns have been lower, so has been the risk or volatility of the scheme. The standard deviation of the fund, a measure for volatility, is among the lowest. The fund management of Franklin India Prima Plus have taken adequate measures to protect the fund from unnecessary risk. In the bargain, it had to forego some amount of returns.

The top five large cap oriented mutual funds in the 3-year rolling period performance include—Kotak Select Focus Fund, Axis Focused 25 Fund, JM Core 11 Fund, SBI Large & Midcap Fund and IDFC Classic Equity Fund.

Investment Strategy of Franklin India Prima Plus (Franklin India Equity Fund)

Franklin India Prima Plus remains fully invested and, on an average, maintains an allocation of over 90% to equities. The fund follows a blend of value and growth style of investing. It sticks to a bottom-up approach to stock-picking and chooses wealth creating companies run by quality management, across sectors.

Franklin India Prima Plus invests in a diversified portfolio of primarily large caps, with a marginal exposure to small and midcaps. The fund keeps a long term view of the market and sticks to a buy and hold strategy. The core portfolio of the fund, made up of large-cap holdings, is rarely churned.

Franklin India Prima Plus - Portfolio Allocation and Market Capitalisation Trends

Franklin India Prima Plus – Top Portfolio Holdings

Top 10 Stocks   Stocks % of Assets HDFC Bank Ltd. 8.70 Infosys Ltd. 5.16 Bharti Airtel Ltd. 4.60 Yes Bank Ltd. 4.34 Larsen & Toubro Ltd. 3.90 ICICI Bank Ltd. 3.77 Mahindra & Mahindra Ltd. 3.69 Kotak Mahindra Bank Ltd. 3.32 Axis Bank Ltd. 3.14 HCL Technologies Ltd. 2.75	Top 5 Sectors
Holdings (in %) as on April 30, 2018 (Source: ACEMF)

As on April 30, 2018, Franklin India Prima Plus held an exposure to 53 stocks. Despite a large number of stocks in the portfolio, the fund allocates as much as 43% to its top 10 holdings. Two stocks in the portfolio – HDFC Bank and Infosys command an allocation of 8.7% and 5.2% respectively, contributing nearly 15% to the total assets. Bharti Airtel, Yes Bank and Larsen & Toubro are among the other stocks in the top 10 holdings.

On analysing the fund's weightage towards sectors, it is found that Banks lead the list with an exposure of 26%. Software stocks follow behind with an exposure around 10%. Pharma, Auto and Consumer Non-Durables are among the other sectors with a 7%-9% weightage each in the portfolio.

Top Gainers in Franklin India Prima Plus’s portfolio

Out of the 53 stocks, about 39 stocks have been held for over a year. This gives a sense that the Franklin India Prima Plus prefers to hold the stock for the long term. Among the top performers in the portfolio, with an average holding above 1%, were Tech Mahindra, Voltas and United Breweries. These stocks gained 61%, 57% and 56% respectively over the past year.

There were a few laggards as well. Lupin, Tata Motors and BPCL were among the large-caps that declined in value. These stocks fell by 39%, 26% and 19% respectively.

Suitability of Franklin India Prima Plus (Franklin India Equity Fund)

Large-cap oriented funds are better poised to handle market volatility vis-à-vis mid-and-small caps.

Stable businesses, greater market share, quality of management and the sustainability prospects are factors that seem convincing to take exposure to large-caps at the current level.

Large blue chip companies with strong balance sheets and proven track records could help ride the wave of short-term volatility to a certain extent. Therefore, diversified equity funds with a predominant large-cap allocation can offer stability to your investment portfolio.

At the same time, funds that are restrictive in their investment approach or those funds that invest only in a concentrated portfolio of large-caps can be volatile and may fail to generate adequate returns over the long term. Only a handful of funds are able to deliver a superior risk-adjusted performance. Not all large cap funds are able to consistently outperform the market across market cycles.

Some large-caps take an opportunistic allocation to mid-caps and offer the perfect mix of stability and growth. Therefore, it is pertinent to review large cap funds even on its ability to limit downside during falling markets.

Multi-cap funds offer investors a dynamically managed portfolio. The ability of the funds to vary their portfolio across market-caps based on the market outlook, gives investors an opportunity to earn higher returns.

Some schemes may have either a predominant large-cap or a significant mid-cap allocation. Funds that have a high allocation to large-cap stocks can offer greater stability, while those with a mid-cap bias offer a potential to earn higher returns. Investors can choose an appropriate fund based on their risk appetite and financial goals. These schemes are expected to do better over a volatile market environment. However, you need to choose cautiously.

Franklin India Prima Plus has done well in the past, however, its mediocre performance over the past few years, deserves further introspection. Though the nomenclature of fund is changed, the fund remains in good hands. You need to compare the fund with similar peers, both on quantitative and qualitative aspects, and decide accordingly.

If you plan to invest in multi-cap funds, do ensure that the investments are in line with your financial goals. If you are not sure about how to align these schemes with your tax planning or financial goals, do consult your financial planner or investment advisor.

Note: This write up is for information purpose and not a recommendation to buy or sell the mutual fund scheme. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor.

Editor's note: PersonalFN has a long track record of offering unbiased mutual fund research services. It analyses thousands of data points to shortlist schemes and also applies a whole host of qualitative parameters to select only a handful schemes for your portfolio. Want to try PersonalFN’s Premium Mutual Fund Research service ‘FundSelect’? Every month, our FundSelect service will provide you with an insightful and practical guidance on which mutual fund schemes to buy, hold or sell, which will assist in creating the ultimate portfolio that has the potential to beat the market. And there’s more great news! FundSelect is turning FIFTEEN. And on this auspicious 15th anniversary of FundSelect, we intend to make it “ultra-special” for you. How? Well, how about getting 1 Year of access to FundSelect virtually Free? And if you wish, perhaps even MORE... Check out the exciting offers that can be availed on subscriptions to FundSelect here. Go ahead and subscribe to PersonalFN’s FundSelect NOW!

 

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DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014  

About the Company including business activity 

Disclosure: Franklin Templeton Asset Management (India) Pvt is a shareholder in Quantum Information Services Pvt. The views published in the report is independent and is not driven by any influence or association with the fund house.

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989. 

QIS was promoted by Mr. Ajit Dayal with an objective of providing value-based information / views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services. 

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

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Details of associates

1. Money Simplified Services Private Limited;
2. PersonalFN Insurance Services India Private Limited;
3. Equitymaster Agora Research Private Limited;
4. Common Sense Living Private Limited;
5. Quantum Advisors Private Limited;
6. Quantum Asset Management Company Private Limited;
7. HelpYourNGO Private Limited;
8. HelpYourNGO Foundation;
9. Natural Streets for Performing Arts Foundation;
10. Primary Real Estate Advisors Private Limited;
11. Rahul Goel;
12. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest

1. Neither QIS, it’s Associates, Research Analyst or his/her relative have any financial interest in the subject Company , except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF.
2. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report.
3. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront /annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices

Disclosure with regard to receipt of Compensation
 

1. Neither QIS nor it's Associates have any compensation from the subject Company in the past twelve months.
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General disclosure
 

1. The Research Analyst has not served as an officer, director or employee of the subject Company.
2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

Subject Company means Mutual Fund Schemes

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222

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