Bird and Buffalo check out a franklin Fund

The bird was not very happy with the World Cup cricket team. The buffalo is generally unhappy, but was particularly unhappy that VVS Laxman didn't find a place.

They were in Goa quietly watching the match against Sri Lanka, until Sehwag got out clumsily setting the bird off into tantrums.

"What can you do now with Sehwag," the bird cried, "We are hoping to win the World Cup and our opener is trying new ways of getting out every match."

"But once upon a time, the guy used to demloish bowling sides," the buffalo was setting her up.

"But how long can you rest on your laurels, there are others waiting in the wings," she was n't convinved.

"Seems what hit Franklin India Prima has hit Sehwag, too," the buffalo gets to the point.


Buffalo Banter:

It is hard to miss the similarities between Franklin India Prima and Virender Sehwag. Both were big hitters and had their day in the sun. And then, for the past year or so both have failed miserably. And Sehwag might have managed one last chance for old times sake from his captain and selectors, are there reasons enough for investors to repose similar faith in Franklin India Prima?

ET Quarterly MF tracker doesn't seem to think so. The latest edition out last week rates the midcap scheme as Silver, meaning just avereage performance on a risk adjusted basis.

The fund's performance over last one year has been below average. It gave 14.6% returns during the one year period. During this period, it trailed both its benchmark and Sensex. While the fund's benchmark S&P CNX 500 gave more than double at 29.4%, sensex returns were almost three times at 42%.

The scheme's Silver rating actually owes a lot to its three year performance, which is far better in comparison. During this period, the scheme's returns at 40.5% pa comfortably beats the benchmark and Sensex, which gave less than 35%pa in last three years.

One of the main reasons for near term under performance by the scheme could be its size. At Rs 1,791 crore, the size of the fund is weighing it down rather than being an advantage given the fact the fund operates in the midcap space.

The fund manager admits that size does play a role, as it is getting difficult for them to build adeqaute stocks to invest in the mid and small cap segments.

Also some of the manager's favourites for a long time like Torrent Pharma(2.78%), Cummins India (2.7%) were dragging along during the last year. Also, a few other calls during the year didn't click hitting the returns. Both these stocks took heavy beating during the correction in May 2006, but have since recovered. The fund manager is still bullish on these stocks.

The scheme generally tends to take a smaller exposure over a larger number of companies. A few larger companies in the mid cap space like Aditya Birla Nuvo(7.5 %), India Cements(5.3), Jaiprakash Associates ( 6.6%) and Ipca Labs (5.3%) have exposure of over 5% of the portfolio. The remaining assets are spread across 30 to 35 smaller companies. The fund aggressively books profits. As of Jan 31, the portsolio included 55 stocks

At present , the managers are bullish on sectors that can piggyback on the domestic consumption theme such as retail banking, consumer goods and automobiles; trends in domestic infrastructure spending such as construction and capital goods. They also believe companies benefiting from the outsourcing theme may offer investment opportunities for long term investors.

At the time of launching the fund, it was India's first open end fund and the name reflects the same. The name also supposedly signifies its focus on unearthing quality mid and small cap stories ahead of the market. Though fund management is not cricket, as it's hard earned money of investors at stake, just like Sehwag Franklin India Prima seems to deserves another chance. For years, the fund has been one of the top return earners under one of the longest serving fund managers in the industry KN Siva Subrmanian, who has been managing the fund since its launch. Impeccable consistent record over many years, stability in fund management and the resurgence in the midcap segment seem to be reasons enough to stay invested in Franklin India Prima despite its near term underperformance.