Identifying trends before they gain popularity has enabled Franklin Templeton India to out perform the BSE Sensex and S&P CNX 500 by a wide margin. Pradeep Rane reports.
Franklin Templeton Investments (India), one of the leading fund houses in the country was in the news last week. On February 16, this year, it made history by mobilising a record Rs1,995 crore for the IPO of its new mutual fund, the Templeton Flexicap Fund, the largest by any open-ended fund in the country and more than two-and-a-half times the previous record of Rs750 crore set in January 2005 by The Tata Infrastructure Fund.

The next day, the company won the prestigious 'Crisil-CNBC mutual fund of the year award' () for the performance of its funds.

In the past few years the US-based Franklin Templeton, which manages $388.9 billion in assets globally, has emerged as a major player in the asset management business in India.

Analysts see the response to the Flexicap IPO as a recognition of Franklin Templeton's established strengths in stock picking and equity fund management. The new fund seeks to provide medium to long-term capital appreciation by investing in stocks across the entire market
capitalisation range.

Its existing equity funds like Franklin India Bluechip Fund, Prima Fund, Templeton India Growth Fund have been rated as being among the best performing equity funds in the country. For instance, its flagship scheme, Franklin India Bluechip Fund, has given a return of 24.6 per cent in the last one year, 50.4 per cent in the last three years and 27.9 per cent since inception.

All its equity funds have outperformed the benchmark indices like BSE Sensex and S&P CNX 500 with a wide margin. Even funds like Franklin India Prime Fund have shown outstanding performance. This fund has offered a return of 36.4 pr cent in the last one year, 76.5 per cent for the last three years and 24.1 per cent since inception. This is the reason for the remarkable success of the Flexicap IPO, which mobilised funds from 2 lakh investors.

"There was a lot of excitement among investors and mutual fund distributors over the new equity scheme from Templeton as its earlier funds like Bluechip, Prima and Primaplus have rewarded investors handsomely," says Samir Kamdar, national head, Mata Securities, a leading domestic MF distributor.

The success of the Templeton Flexicap Fund is seen as a major boost to the domestic equity market, which has the potential of attracting Indian investors in even larger numbers. The Indian bourses are currently dominated by foreign institutional investors who have pumped in over $8.5 billion in the past year whereas domestic MFs have been net sellers in the market.

"The tremendous response to the new equity fund from Franklin Templeton's India business reflects the metamorphosis in Indian markets. Over 200,000 applications from over 80 locations in the country is a testimony to mutual funds becoming a savings vehicle of choice for the Indian investors," says Ravi Mehrotra, president, Templeton India.

Franklin Templeton India currently has three equity funds (Franklin India Bluechip Fund, Prima Fund, Templeton India Growth Fund), which have assets of over Rs5000 crore and a performance track record of over 10 years. It has over Rs16,000 crore of assets under management and an investor base close to 900,000.

Says Sivasubramanian, Templeton's star fund manager, "Over the years, Franklin Templeton has used a disciplined approach to investing that has helped us in identifying trends before they have become popular and in providing consistent returns to our investors over the past decade or so. The same investment philosophy will be used to manage Flexi Cap Fund."

Its debt funds, too, are doing well. For instance, its debt schemes like Templeton India Treasury Management Account, Templeton India G-Sec Fund (both the Composite Plan and Long Term Plan) FT India Monthly Income Plan have bagged the CRISIL- CNBC mutual fund award during the year. This outstanding performance in both equity and debt funds has made Templeton among the top private sector mutual funds in the country.

also see : Franklin Templeton receives CRISIL-CNBC-TV18 'mutual fund of the year award' for 2004