‘But Subra is this fund true to label? – no no no client or reader ever asked this..but you see references made once in a while. Well Franklin Templeton is one fund house which has schemes which are true to label. So Franklin India Bluechip fund will never invest in a mid cap stock, and Franklin Prima will not waste its time on the the large cap names. Templeton India Growth fund is a Value label.
Hdfc refuses to classify its schemes…but when you see you realize that Hdfc Prudence is a more value oriented perception. However there is no written philosophy of being value oriented. Hdfc ‘Growth’ well the name does not mean anything.
Once upon a time funds used to be named even worse – Bank of India Mutual fund had a fund ‘BOINANZA’ . Canara Mutual fund had a fund ‘Candouble’….then there was ‘BOI Triple’…and so on. No investor understood what the fund would do. Sebi stepped in and banned such names.
Even today you have Reliance Growth – a very successful fund. However Hansi Mehrotra could never have invested in this fund. It started off as a mid cap, had Reliance Industries in its portfolio for a long time, then had (has) large cap…and is now a multi cap fund. Imagine as a research person if you were to compare this to Franklin Prima – a clear midcap fund and true to label…its not on.
Who should ensure purity of purpose? and make sure hat Pepsi is not bottled in a coke bottle? Of course it is the fund manager and the Board of Directors, but I believe it should be the Board of Trustees. It should be their job and they have failed miserably.
HOW DOES IT MATTER?
One argument I hear frequently is ‘So what Reliance Growth has made money for its shareholders’. Well I do not want my fund manager to take a call on MY PORTFOLIO. I am the owner and I will do asset allocation myself. So if I wish to be 70% in a large cap fund (actively managed), and 30% in Midcap – I will be very comfortable in being in Franklin India Bluechip (I have other issues with FT as a fund manager, but purity of style is not) and Franklin India Prima fund. I do not want to wake up with 82% in midcap because of the fund manager’s ‘grazing’ habit.
read what Hansi Meherotra has to say……..
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