Franklin India Prima Fund

 

Franklin India Prima Fund has an excellent track record. Its 15-year annualized returns are 26%. Although Janakiraman was named the co-manager in February 2008, he has been acting as the lead manager only since February 2011.

Franklin India Prima Fund has done extremely well under his watch. It underperformed the category average in 2015, featuring in the category's third performance quartile, given a poor showing by stocks such as Yes Bank and Finolex Cables. However, the same stocks helped the fund rebound in 2016 and outperform 66% of the competition.

Fundamental research forms the crux of the investment process. The coverage list for small/mid-caps is built by the portfolio managers in conjunction with the analysts. When selecting companies, the investment team places strong emphasis on qualitative aspects such as managerial strengths and corporate governance standards; also, rigorous business analysis is performed to understand the growth prospects of the industry, its competitive landscape, entry barriers, the company's market share, and scalability prospects of the business, among others.

Analysts construct sector-based model portfolios comprising the best ideas from stocks in their investment universe, which in turn is compiled by the research head to construct a diversified small/midcap portfolio.

Fund Manager uses this model portfolio as his initial reference point, and he selects companies that can generate consistent and sustainable earnings growth over a business cycle and have low leverage and reasonably high ROEs. He is aware that it is difficult to forecast earnings in small/mid-caps over a long-term horizon given the unpredictable nature of their cash flows; hence, he uses historical five-year data as a yardstick to project five years ahead. He is not very rigid on valuations so long as the company fulfills his investment criteria.

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