Conservative mutual fund investors can take a note of Templeton India Growth Fund. The fund has delivered reasonable returns of around 37.71%, in the last five years. The fund didn?t take exposure to the in-vogue construction and power sector, which is one of the reasons for its underperformance in comparison to the peers in the last three years. However, in the last six months the fund has given a return of -24%. And, this is relatively better than the average returns in the diversified funds category and the Sensex of -36.5 and -32, respectively.
What has worked?
If one looks at the portfolio composition, its top 10 stocks constitute around 62% of the asset size. The average decline in the top 10 stocks was relatively lower than the benchmark index returns resulted in the lower fall. The fund?s performance didn?t bear the impact of the decline in the banking sector considering its lower exposure (the fund was holding just 7%, which includes diversified five large- and mid-cap banks). Its exposure to IT sector(constitutes 13%), however, resulted in limited downside risk considering the positive returns delivered by software companies in the last three months.
Risk-return ratio
From risk and returns perspective, the fund is better for passive and conservative investors and not for the aggressive investors. The fund has been consistent in terms of returns, which is reflected in lower beta of 0.84. Other than this, its Treynor ratio, which measures returns earned in excess of that which could have been earned on a riskless investment per each unit of market risk, is 1.10.
The portfolio turnover– the total amount of new securities purchased or the amount of securities sold – whichever is less – over a particular period, divided by the total net asset value (NAV) of the fund over a 12-month time period, is at 16%. It must be noted that a fund with a high turnover rate will incur more transaction costs than a fund with a lower rate.
In case of Templeton IndiaGrowth Fund has a disciplined approach of investing. Its top five sectors constitute 81% which is on a higher side. It is having a cash holding of 5.35%. This is relatively lower than other aggressive funds cash holding of more than 10%.
Templeton India Growth was launched in 1996. Minimum investment required in this fund is Rs 5,000. The fund is managed by Dr Mark Mobius.