If there is one fund that is perfect for a long-term portfolio, it is Franklin India Bluechip Fund. This equity fund delivers stable returns, stays true to its mandate of investing only in large-cap stocks, and picks only those stocks that have good growth prospects, reasonable valuations, and good governance.
Franklin India Bluechip’s returns will not always be at the top of the pack. During bull markets, several peers overtake this fund by a sizeable margin. In beating its peers, the fund may not always deliver. But three factors make it a great fit for long-term portfolios.
The first is its stability. Compared to its large-cap peers, Franklin India Bluechip has the lowest volatility (measured by standard deviation) in its returns. The second is its ability to protect returns during bear markets. Part of the reason its volatility is low is because the fund is able to contain losses much better than both its benchmark and its peers in declining markets. It has clocked among the smallest losses in 2008, 2011, and even in the 2015 large-cap rout. The third is its consistency over the long term. Rolling five-year returns since its inception in 1993 has the fund beating its benchmark – the Sensex – nearly all the time. That’s a shining record of consistent, long-term performance. There isn’t any five-year period since inception where the fund has suffered a loss.
Solid in the long-term
In one, three, and five-year periods Franklin India Bluechip has beaten the Sensex by 3 to 8 percentage points. However, the fund can dip in the short to medium-term. This is due to its mandate of investing only in blue-chips, and a long-term view in stock selection with a focus on valuations and quality.
Since it restricts itself to large-caps, returns fall short of peers in rallying markets. Most large-cap funds do move 10-15 per cent (in the recent rally, it is even higher for some funds), into mid-cap stocks. In the year to date, for example, the fund’s 13.2% return is quite a bit away from the 15% of the chart toppers. In the 2013-15 rally, its 78% return was short of the category’s average 86%, but still far better than the Sensex’s 65%.
Also causing bouts of short-term under-performance is its buy-and-hold investment style. The fund picks stocks that are reasonably valued and are quality companies. Further, the large-cap mandate may also prevent it from picking winners as other funds do in themes such as infrastructure, engineering, auto ancillaries, consumer durables, and industrials, where opportunities are mostly in mid-caps.
Over the long-term however, the fund scores very well. Rolling five-year returns daily over the past ten years shows that the fund has beaten its benchmark, the Sensex, all the time, and by a good margin. The average of these rolling returns at 21.2% is among the best in its category, despite its conservative and large-cap mandate. Funds such as HDFC Top 200 and HDFC Equity, which also deliver high long-term returns, are much more volatile and tend to have longer periods of under-performance. Franklin India Bluechip has a winning combination of low volatility while still maintaining above-average risk-adjusted returns (measured by Sharpe).
Holdings
The fund does not churn sector and stock exposures too much. It gradually increases or drops weights of both stocks and sectors. Individual stock holding can be slightly higher at 7-8 % of the portfolio.
Currently, the fund is betting on a banking turnaround. It mostly holds private sector banks such as HDFC Bank, Yes Bank, IndusInd Bank and Axis Bank. This gives it a play on both consumption and cyclical revival. Cyclical plays also include the conglomerate Larsen & Toubro, large cement players, and some energy plays such as Reliance Industries, Power Grid Corporation, and ONGC.
Given the dwindling prospects of software, the fund’s holding in that sector is down, as is the case in pharmaceuticals. Instead, it has increased holdings in automobiles and consumer non-durables over the past year. It has also slightly increased cash to 6.6% of the portfolio now, given the uneasy state of the markets. The portfolio is thus a good balance between defensives, consumption, and the long-term cyclical theme.
The fund has an AUM of Rs 7,636 crore. Anand Radhakrishnan and Roshi Jain are the fund’s managers.
FundsIndia’s Research team has, to the best of its ability, taken into account various factors – both quantitative measures and qualitative assessments, in an unbiased manner, while choosing the fund(s) mentioned above. However, they carry unknown risks and uncertainties linked to broad markets, as well as analysts’ expectations about future events. They should not, therefore, be the sole basis of investment decisions. To know how to read our weekly fund reviews, please click here.
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Pls let me know how to purchase this fund
Hi,
You can log into your FundsIndia account to invest in the fund (Invest tab).
Thanks,
Bhavana
Wht is minimum investment. Whtether Investment in SIP can b mDe. Wht is NAV. How much SIo per month is advisable
Hello,
The details you require (min amount etc) are available here: http://www.fundsindia.com/products/mutual-fund/scheme/Franklin-India-Bluechip-Fund-G-?c=931
You can make SIPs in the fund. The amount of SIP depends on how much you can save, the other funds (if any) you hold in your portfolio, your time-frame and so on.
Thanks,
Bhavana
Wht is minimum investment. Whtether Investment in SIP can b made. Wht is NAV.?How much SIP per month is advisable
Tejinder:
Minimum investment is the mimnimum lumpsum or SIP needed to be put in each fund. SIP per month should be based on how much you can save and what is your goal. Please read this to know about NAV: https://blog.fundsindia.com/blog/mutual-funds/what-is-nav/8778
Do I have to pay any tax as I am NRI, if I invest money there.
Adarsh, If you hold for over a year since the date you bought, capital gains is exempt for equity funds. It is true of NRIs as well. Vidya
Sometime back FundsIndia had recommended UTI opportunites fund which for the past year is not doing well.. Should one keep on holding it or redeem now.
Hello,
You can still continue to hold the fund. Due to following a value-based strategy, the fund had picked up stocks that were in troubled sectors such as banking, industrials and oil & gas. With the recent sharp market rally, these sectors have begun to do well. The fund’s performance in the past six months has recovered quite well and begun to catch up. It closed the gap with the BSE 100 index (its benchmark) and the category as well. The fund’s management also changed, though the basic style remains the same. Some stocks have been removed from the fund to make it slightly more compact. So as earnings recovery happens and the market continues to get more broad-based, the fund can see better performance.
Thanks,
Bhavana
Thanks.
Hi
I am already your customer. I am interested in Birla Sunlife Resurgent-1 fund which is a new fund. But could not see that in the list. How do I invest in the same
Hello sir,
Hope our customer support team has contacted you and resolved your query.
Thanks,
Bhavana
Pls let me know how to purchase this fund
Hi,
You can log into your FundsIndia account to invest in the fund (Invest tab).
Thanks,
Bhavana
Wht is minimum investment. Whtether Investment in SIP can b mDe. Wht is NAV. How much SIo per month is advisable
Hello,
The details you require (min amount etc) are available here: http://www.fundsindia.com/products/mutual-fund/scheme/Franklin-India-Bluechip-Fund-G-?c=931
You can make SIPs in the fund. The amount of SIP depends on how much you can save, the other funds (if any) you hold in your portfolio, your time-frame and so on.
Thanks,
Bhavana
Wht is minimum investment. Whtether Investment in SIP can b made. Wht is NAV.?How much SIP per month is advisable
Tejinder:
Minimum investment is the mimnimum lumpsum or SIP needed to be put in each fund. SIP per month should be based on how much you can save and what is your goal. Please read this to know about NAV: https://blog.fundsindia.com/blog/mutual-funds/what-is-nav/8778
Sometime back FundsIndia had recommended UTI opportunites fund which for the past year is not doing well.. Should one keep on holding it or redeem now.
Hello,
You can still continue to hold the fund. Due to following a value-based strategy, the fund had picked up stocks that were in troubled sectors such as banking, industrials and oil & gas. With the recent sharp market rally, these sectors have begun to do well. The fund’s performance in the past six months has recovered quite well and begun to catch up. It closed the gap with the BSE 100 index (its benchmark) and the category as well. The fund’s management also changed, though the basic style remains the same. Some stocks have been removed from the fund to make it slightly more compact. So as earnings recovery happens and the market continues to get more broad-based, the fund can see better performance.
Thanks,
Bhavana
Thanks.
Do I have to pay any tax as I am NRI, if I invest money there.
Adarsh, If you hold for over a year since the date you bought, capital gains is exempt for equity funds. It is true of NRIs as well. Vidya
Hi
I am already your customer. I am interested in Birla Sunlife Resurgent-1 fund which is a new fund. But could not see that in the list. How do I invest in the same
Hello sir,
Hope our customer support team has contacted you and resolved your query.
Thanks,
Bhavana
Hi Nice blog on Franklin India Blue Chip Fund. I have a question here I think even Franklin India Prima Plus also a large cap fund (approx 75-80%) and rest in mid cap (20 to 25%) suits for long term portfolio as it invests in midcap aswell. The returns will be little more than a Blue chip fund. I think the fund manager is same too and also churning of portfolio is same like bluechip fund.
Can an investor hold either of one Bluechip or Primaplus your opinion pls?
Hi Satish,
Strictly speaking, Prima Plus is a multi-cap fund, not a large-cap one. 25% in mid-caps (and the fund’s gone beyond that as well, sometimes) makes it a higher risk fund than Bluechip. Bluechip is very firmly in the large-cap space only (90% and over). Prima Plus is certainly a good fund and is perfectly suitable for the long-term and it will deliver higher returns compared to Bluechip. The choice ultimately comes down to your own risk level and the other funds you own in your portfolio. It’s hard to say whether you should hold Prima Plus or Bluechip without knowing these. If you have a mid-cap heavy portfolio, or you hold other diversified funds which are high risk, you can provide stability through Bluechip. That’s Bluechip’s greatest asset -its low-volatile, but still good returns. Else, by all means, go ahead with Prima Plus if you don’t have much mid-caps.
Thanks,
Bhavana
Does HDFC Equity fall in same category as FI Prima Plus. HDFC has been under performer for so many years. If horizon is 20 plus years. what you see
similarly is HDFC Top 200 and FI Bluechip in same category. what are your views between these two funds.
Hi Akash,
Both Franklin Prima Plus and HDFC Equity take large-cap and mid-cap exposure. But HDFC Equity is more large-cap oriented than Franklin. However, in terms of performance, Franklin Prima Plus is by far more consistent and less volatile, even with the lower large-cap allocations. HDFC Equity is a fund that normally does very well during bull markets and very badly during bearish markets – the fund isn’t able to contain downsides well. HDFC Top 200 is a large-cap fund, in the same category as FI Bluehcip. But FI Bluechip stays only with large-cap stocks. It doesn’t do mid-caps at all. HDFC Top 200 moves into mid-caps when suitable. HDFC Top 200 also goes through phases of underperformance, but this fund is better than HDFC Equity. You necessarily need to be able to see poor performance and you need a much higher risk appetite with the two HDFC funds. If you have a long-term horizon and you accept the higher risk and performance fluctuation involved in these funds, you can continue holding them. FI Bluechip will suit any investor and any long-term portfolio because it’s low-volatile and steady.
Thanks,
Bhavana
Thanks Bhavana for reply
So for a long term horizon you suggest moving away from HDFC Equity and getting into FI PP on risk-return matrix
Akash,
If you already hold HDFC Equity, continue to hold it given that you’re now aware of the nature of the fund. If it’s fresh investments you’re considering between the two, then by all means, Franklin Prima Plus is the steadier and better one.
Thanks,
Bhavana
Does HDFC Equity fall in same category as FI Prima Plus. HDFC has been under performer for so many years. If horizon is 20 plus years. what you see
similarly is HDFC Top 200 and FI Bluechip in same category. what are your views between these two funds.
Hi Akash,
Both Franklin Prima Plus and HDFC Equity take large-cap and mid-cap exposure. But HDFC Equity is more large-cap oriented than Franklin. However, in terms of performance, Franklin Prima Plus is by far more consistent and less volatile, even with the lower large-cap allocations. HDFC Equity is a fund that normally does very well during bull markets and very badly during bearish markets – the fund isn’t able to contain downsides well. HDFC Top 200 is a large-cap fund, in the same category as FI Bluehcip. But FI Bluechip stays only with large-cap stocks. It doesn’t do mid-caps at all. HDFC Top 200 moves into mid-caps when suitable. HDFC Top 200 also goes through phases of underperformance, but this fund is better than HDFC Equity. You necessarily need to be able to see poor performance and you need a much higher risk appetite with the two HDFC funds. If you have a long-term horizon and you accept the higher risk and performance fluctuation involved in these funds, you can continue holding them. FI Bluechip will suit any investor and any long-term portfolio because it’s low-volatile and steady.
Thanks,
Bhavana
Thanks Bhavana for reply
So for a long term horizon you suggest moving away from HDFC Equity and getting into FI PP on risk-return matrix
Akash,
If you already hold HDFC Equity, continue to hold it given that you’re now aware of the nature of the fund. If it’s fresh investments you’re considering between the two, then by all means, Franklin Prima Plus is the steadier and better one.
Thanks,
Bhavana
Hi Nice blog on Franklin India Blue Chip Fund. I have a question here I think even Franklin India Prima Plus also a large cap fund (approx 75-80%) and rest in mid cap (20 to 25%) suits for long term portfolio as it invests in midcap aswell. The returns will be little more than a Blue chip fund. I think the fund manager is same too and also churning of portfolio is same like bluechip fund.
Can an investor hold either of one Bluechip or Primaplus your opinion pls?
Hi Satish,
Strictly speaking, Prima Plus is a multi-cap fund, not a large-cap one. 25% in mid-caps (and the fund’s gone beyond that as well, sometimes) makes it a higher risk fund than Bluechip. Bluechip is very firmly in the large-cap space only (90% and over). Prima Plus is certainly a good fund and is perfectly suitable for the long-term and it will deliver higher returns compared to Bluechip. The choice ultimately comes down to your own risk level and the other funds you own in your portfolio. It’s hard to say whether you should hold Prima Plus or Bluechip without knowing these. If you have a mid-cap heavy portfolio, or you hold other diversified funds which are high risk, you can provide stability through Bluechip. That’s Bluechip’s greatest asset -its low-volatile, but still good returns. Else, by all means, go ahead with Prima Plus if you don’t have much mid-caps.
Thanks,
Bhavana