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Franklin India Corporate Bond Opportunities Fund

The Franklin India Corporate Bond Opportunities Fund is an accrual fund which invests in high yielding corporate bonds for short or medium terms. Investing in corporate securities reduces the risk factor involved, thanks primarily due to the research conducted by Franklin Templeton India. This fund aims to provide capital appreciation and regular income to investors by utilizing corporate bonds.

Type or nature of fund

Franklin India Corporate Bond Opportunities Fund is an open ended income fund.

Investment objective

The primary objective of Franklin India Corporate Bond Opportunities Fund is to invest in the developing corporate bond segment in the country in a bid to capitalize on future growth.

Fund information

Inception date December 7, 2011
CRISIL rank Ranked 4 in Credit opportunities fund by CRISIL
Schemes
  • Growth Plan
  • Dividend Plan
  • Direct Growth Plan
  • Direct Dividend Plan
Entry load Nil
Exit load

3% for redemptions within 1 year of allotment .

2% for redemptions after 12 months but before 24 months from date of allotment.

1% for redemptions after 24 months but before 36 months from date of allotment.

Minimum investment Rs 5,000
Product label – Risk and target investors Moderate Risk product designed for investors looking for medium to long term capital appreciation with their current source of income through investments in corporate securities.
Benchmark CRISIL Short Term Bond Fund Index
  • The CRISIL Short Term Bond Index is used as a benchmark to test the performance of debt portfolios which include corporate bonds, commercial papers, government securities and certificates of deposit.
SIP (Systematic Investment Plan)
  • Rs 500 (12 SIP investments of Rs 500 each - minimum)
  • Rs 1,000 (6 SIP investments of Rs 1,000 each - minimum)
SWP (Systematic Withdrawal Plan) Yes. Available to investors with a minimum account balance of Rs 25,000 who can choose between a monthly or quarterly option.
STP (Systematic Transfer Plan) Yes. Monthly or quarterly mode available with redeemed unit needing to be reinvested in another scheme.
Redemption Minimum Redemption Amount – Rs 1,000.
Taxation (on investment and on redemption) Investors need to consult their tax adviser to get a clear picture of the tax implications arising out of their investment in this mutual funds scheme.

Fund managers

Franklin India Corporate Opportunities Fund has two fund managers, Mr. Santosh Kamath and Mr. Sumit Gupta.

Mr. Santosh Kamath

Designation and Work
  • Mr. Kamath is the Chief Investment Officer and Managing Director at Franklin Templeton and is in charge of Fixed Income Funds at the organization.
  • Mr. Kamath has over 20 years of experience in this field and has been with Franklin Templeton for almost 9 years.
Education
  • Mr. Kamath has an MBA from XLRI, Jamshedpur and a BE from REC, Bhopal.

Mr. Sumit Gupta

Designation and Work
  • Mr. Gupta is a portfolio manager for fixed income at Franklin Templeton and is in charge of evaluation of company credits.
  • Mr. Gupta was the Vice President at Kotak Mahindra Bank before joining Franklin Templeton in his current designation.
Education
  • Mr. Gupta has a degree in management from IIM, Calcutta and a BE from IIT, Delhi.

Investment philosophy or strategy

The primary philosophy driving Franklin India Corporate Bond Opportunities Fund is to invest in corporate bonds with a maturity period of 36 months. This fund will not deal with government securities, capitalizing on Securitized debt instead, which offers risk diversification, better credit strength and yield pick up.

Portfolio – Top 10 holdings

Company Name Rating Percentage
JSW Steel Ltd Care AA 6.61
Adani Enterprises Ltd Care A+(SO) 4.93
Reliance Project Ventures and Management Pvt Ltd BWR A+(SO) 3.81
HPCL Mittal Pipelines Ltd ICRA AA- 3.8
Dolvi Minerals and Metals Ltd BWR A-(SO) 3.46
JSW Techno projects Management Ltd BWR A(SO) 3.43
Hinduja leyland Finance Ltd Care A+ 3.42
Jindal Steel and Power Ltd Care AA 3.32
Reliance Communications Enterprises Private Ltd BWR A+(SO) 3.31
Tata Teleservices (Maharashtra) Ltd IND A+ 2.84

Risk measures – Last three years

The risk measures for various criteria over the last three years are mentioned below.

Sharpe ratio (Annualized) 1.72
Sortino Ratio 3.07
Beta N/A
Standard Deviation 2.26

Performance

AUM Rs 8788.20 crores (as of June 30, 2015)
NAV (as of 03/09/2015)

Dividend – 11.19

Growth – 14.59

Direct Dividend – 11.48

Direct Growth – 14.93

Returns

The returns provided by Franklin India Corporate Bond opportunities Fund in comparison to market returns are shown in the table below.

Period Scheme returns CRISIL Short Term Bond Fund Index CRISIL 10 year Gilt Index
March 2012 – March 2013 11.12% 10.40% 14.63%
March 2013 – March 2014 8.83% 8.78% -1.01%
March 2014- March 2015 11.89% 9.05% 11.25%

Expense Ratio

The Expense ratio of Franklin India Corporate Bond Opportunities Fund is mentioned in the table below.

Daily Net Assets Expense ratio
First 100 crores 2.52%
Next 300 crores 2.27%
Next 300 crores 2.02%
On Remaining Balance 1.77%

The current expense ratio is 1.80% for regular and 0.89% for direct (As of July 31, 2015).

Expert view of the fund

Franklin India Corporate Bond Opportunities Fund has consistently performed well, coming in the top ten funds in its category almost every year. A team of talented and smart funds managers have improved the prospects for this fund, which has managed to carve a special place for itself in this segment. With an average maturity of 36 months this fund offers a practical avenue for those looking for decent returns without waiting a long time. There are chances for this fund to face hurdles in the future, thanks primarily to its credit dependant portfolio.

How to apply – online + distributors

Individuals have the option to apply for this fund either through the online medium or the traditional offline platform. Any individual who wishes to register online needs to log onto the official website of Franklin Templeton India and follow a few basic steps. He/she is required to provide his/her mobile number, email id, PAN details and bank details in order to successfully register.

Offline registration can be done by approaching any registered distributor (bank/MF office) and filling out the relevant forms.

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