Indian Mutual funds are not true to label
‘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……..
enjoy….
param
the worst offenders are the index funds. with such huge tracking errors, it is a shame that such fund houses are not shut down for sheet incompetence!
aditya modi
Take a bow sir. your comparisons are eye openers when used among the masses!!
thank you for this post.
NN
But Franklin Smaller Companies has HDFC bank (2%) and Yes bank (2.96%. In fact HDFC bank/Yes is present across Blue Chip/Prima Plus and Small Cap
Voltas in small cap..
C J gopinath
Tata motors is classified as Large cap and Tata motors DVR as midcap.
Quite curious to know why
Sanjay Singhaniya
Dear Sir,
I would like to have your opinion on “SBI Bluechip fund”. Its perfromance is best in large cap category in last 3 years and 5 years. Is it just a flash in the pan or is it a consistent performer?
As per my expectation, it is okay if it does not remain as best performer as long as it is top 25% performers.