Learn the Philosophy of Franklin India Prima Fund strategy

By on February 21, 2020
Fund strategy

The Franklin India Prima Fund is an open-ended growth fund that invests in small and medium-sized companies with the potential to generate high income. It is a high-risk investment with high capital investment potential that also provides high returns. This fund is suitable for experienced investors who are not afraid to take risks. The scheme aims to provide medium to long-term capital appreciation as a primary goal, and profits as a secondary goal.

For the past eight years, Franklin India Prima Fund has consistently outperformed its benchmark. It has adapted itself highly to market cycles, maintaining its outperformance through the twists and turns of consumer preferences. In the last four years, it has enabled it to hold a four and five-star rank.

The Franklin India Prima Fund focuses on mid-and small-cap companies. It follows a strategy of growth at a reasonable price strategy. Some of its attributes in businesses that are attractive capital returns, free cash flow, moderate capital intensity, and tremendous growth opportunities. That needs to be complemented by competent and disciplined management and an appropriately cautious board of directors.

A look back at the track record shows that the fund has navigated bull markets better than bear markets. But despite falling behind the benchmark in 2008, the fund reversed well into the 2011 decline. The three- and five-year CAGR are 7-11 percentage points ahead of the benchmark but neck and neck with the category. The fund has lagged in the past year, perhaps due to its lower weight than the category of large and small caps.

Although it has not outpaced its peers on a year-on-year basis, it has been a significant wealth maker in four market cycles, with a CAGR of 21 percent since its launch. Midcap often has 65 to 70 percent of assets. That is more than the allocation per category of midcap. Franklin India Prima Fund is a veteran in the midcap category. 

Franklin India Prima Fund Strategy and philosophy

The investment philosophy of the Franklin India Prima Fund is to find companies that are in their nascent stage in various fields and have a high potential for future growth. It seeks to reduce risk by investing in multi-sector businesses and diversifying its portfolio. This strategy is considered to be a high risk, but it aims to offer high returns on investment. 

What is the expert view of the fund?

The Franklin India Prima Fund has performed decently since its inception in 1993, gaining momentum over the last four years. It is a high-risk fund that produces maximum returns and has managed to live up to its promise on most occasions.

A smart investment strategy and professional leadership have helped it to remain in a highly competitive market, improving the fund with the decision to invest in companies with reliable returns. Investing in this fund can make sense if one is willing to accept the risk factor involved and stay invested for a more extended period.

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