Of late, Templeton India Growth Fund has become quite popular among the mutual funds being traded in various stock exchanges of India. This fund is deemed to be quite ideal for investors who are interested in traditional form of investments and people who have been buying and selling stocks for a minimum period of five years.
The scheme adopted by Templeton India Growth Fund is purchasing and holding shares for a more extensive tenure with a powerful push on their assessed price. The most attractive feature of this fund is that for a period of more than 10 years or so, dividends are being disbursed to the shareholders on a regular basis.
It is being noticed by the analysts that the market valuation has been escalating throughout the last year and they consider it to be an outcome of inadequate earnings increment and a drastic hike in share prices. They are of the opinion that a value-oriented strategy might be rewarding at this point of time. The portfolio price earning of Templeton India Growth Fund has grown manifold (17 times) till the month of December 2012 which is somewhat less in comparison to the 18 times of Sensex. The price-earning ratio of the fund has been more stable over the past three years as well in comparison to the more extensive movements of the Sensex.
Templeton India Growth Fund might not yield the best possible returns that are usually offered by equity shares. However, the fund can safeguard the investor from the possibility of loss in a downward market. Excluding the year 2011, the fund has been able to curb slump in net asset values at the time of market slump sensibly.
Performance of Templeton India Growth Fund
For a period of more than 12 months, the yield from the fund was 26% which has surpassed its 20% yardstick considerably. Throughout the periods of three and five years, this growth fund has been able to overtake its yardstick as well.
Based on 5-year rolling returns, however, TIG fund has surpassed its yardstick just approximately 60% of the time as a result of its poor functioning in the year 2011. Nevertheless, dividends have been distributed to the stockholders at times when the fund was not performing too well also. However, the Systematic Investment Plan return of 9.1% throughout this tenure indicates that this might be the most favorable way for investing in this fund.
The top ten stakeholders of this fund in terms of percentage of assets are given below:
ING Vysya Bank – 14%
Hindalco Industries – 7.7%
Tata Chemicals – 11.4%
Bajaj Holdings and Investment – 6.7%
Sundaram Finance – 6.9%
Grasim Industries – 5%
Reliance Industries – 5.5%
ONGC – 4.8%
ICICI Bank – 4.9%
Tata Investment Corporation – 4.7%
Templeton India Growth Fund boasts a fixed portfolio of 25-35 stocks. At present, approximately 77% of the portfolio is ruled by the large cap stocks. The stake of mid cap stocks is quite reasonable and the existence of small cap stocks is nominal. However, taking into consideration that valuation factors are used to choose stocks, this ratio is bound to be modified.
Sam Payn is an experienced financial writer and blogger. His forte is writing informative articles on different investment and personal finance topics, especially mutual funds.
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