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Franklin India Smaller Companies Fund

The Franklin India Smaller Companies Fund is an open ended diversified equity fund with the primary objective of providing long term capital appreciation. It invests predominantly in small and mid cap companies, following a bottom up approach to diversify its portfolio. This is best suited for investors who can wait for at least 3 years and those who can handle higher risk.

Type or nature of fund

The Franklin India Smaller Companies Fund (FISCF) is an open ended diversified equity fund.

Investment objective

The primary objective of Franklin India Smaller Companies Fund is to provide long term capital appreciation on investments by investing in small and mid cap companies.

Fund information

Inception date

Close ended scheme - January 13, 2006

Open ended scheme – January 14, 2011

CRISIL rank FISCF is ranked 2 in the mid and small cap segment
Schemes
  • Growth Plan
  • Dividend Plan – Reinvestment and Payout options
  • Direct Growth Plan
  • Direct Dividend Plan - Reinvestment and Payout options
Entry load Nil
Exit load The exit load is 1% for redemptions within one year of allotment.
Minimum investment Rs 5,000
Product label – Risk and target investors This is a high risk product and is designed for investors looking for long term capital appreciation through funds which invest in small and mid cap companies.
Benchmark CNX Midcap
  • CNX Midcap is a benchmark for the mid cap segment of the Indian market, representing 13.86% of all free float market capitalization stocks in the NSE.
SIP
  • Rs 500 (minimum 12 SIP investments of Rs 500 each)
  • Rs 1,000 (minimum 6 SIP investments of Rs 1,000 each)
SWP

Yes, SWP facility is available to unitholders who have a minimum account balance of Rs 25,000.

They can opt for either a Monthly or quarterly mode.

STP

Yes.

STP facility is available on a monthly or quarterly basis. All redeemed units should be reinvested in another scheme under STP.

Redemption

Minimum Redemption Amount – Rs 1,000.

This amount will be sent to an unitholder within ten working days.

Taxation (on investment and on redemption) Investors are advised to consult their tax advisers regarding specific tax implications related to their participation in this scheme.

Fund Managers

The Franklin India Smaller Companies Fund has two fund managers, Ms. Roshi Jain and Mr. Janakiraman Rengaraju.

Mr. Janakiraman Rengaraju

Designation and Work
  • The Vice President of Portfolio Management Equity at Franklin Templeton India, Mr Rengaraju is also the fund manager for multiple funds like the Franklin India Flexi Cap, Franklin India Prima Fund, Franklin India Opportunities Fund and the Franklin India High Growth Companies Fund.
  • Mr. Rengaraju has been in the investment field for over 14 years, having worked with Indian Syntas group and UTI Securities before joining Franklin Templeton.
Education
  • Mr. Rengaraju is a MBA from IIM Bangalore, a BE from Government College of Technology, Coimbatore and is also a CFA Charterholder.

Ms Roshi Jain

Designation and Work
  • Ms Roshi Jain is the Vice President of Portfolio Management - Equity at Franklin Templeton India. Apart from handling this fund, Ms Jain is also the portfolio manager for other funds like Franklin India Flexi Cap, Franklin Asia Equity Fund and Franklin Build India Fund.
  • Ms Jain has been in this field for the last 14 years, having worked with Goldman Sachs previously.
  • Education
  • Ms Jain did her CA from ICAI, PGDM from IIM Ahmedabad and is a CFA Charterholder.

Investment philosophy or strategy

The main strategy employed by Franklin India Smaller Companies Fund is to utilise the potential of small and mid cap companies which could ride the economic boom in the country. Companies which are likely to prosper during this period are going to catch the eye of FISCF. The fund attempts to diversify its investments by following a bottom-up approach, covering different sectors and minimising risk.

Portfolio – Sector / Top 10 holdings

Company Sector Percentage
Finolex Cables Ltd Industrial Products 3.12
Yes Bank Ltd Banking 3.04
Axis Bank Ltd Banking 2.4
FAG Bearings (India) Ltd Industrial Products 2.39
Himatsingka Seide Ltd Textile Products 2.37
HDFC Bank Ltd Banking 2.36
Greaver Cotton Ltd Industrial Products 2.18
Karur Vysya Bank Ltd Banking 2.16
Repco Home Finance Ltd Finance 2.07
Tata Motors Ltd Auto 2.03

Risk measures

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

Annualised Sharpe Ratio 2.25
R-squared 0.79
Beta 0.76
Standard Deviation 4.61

Performance

AUM Rs 2273.17 crores (as of May 29, 2015)
NAV (as of 31/07/2015)

Dividend – Rs 24.78

Growth – Rs 38.64

Direct Dividend - Rs 25.37

Direct Growth – Rs 39.46

Returns

The returns provided by Franklin India Smaller Companies Fund in comparison to market returns are shown in the table below.

Period Scheme returns S&P CNX Midcap S&P CNX Nifty
March 2014-March 2015 77.23% 50.96% 26.65%
March 2013-March 2014 37.90% 16.36% 17.98%
March 2012-March 2013 15.11% -4.02% 7.31%

Expense Ratio

The Expense ratio of Franklin India Smaller Companies Fund is mentioned in the table below.

Daily Net Assets Expense ratio
First 100 crores 2.84%
Next 300 crores 2.59%
Next 300 crores 2.34%
Remaining Balance 2.09%

Expert view of the fund

Franklin India Smaller Companies Fund has changed from a closed ended scheme to an open ended one since its first launch 9 years ago. The scheme, in its current avatar is suitable for individuals who are not afraid of high risks investments, offering a tactical exposure opportunity to investors. The fund has performed consistently well over the last few years, providing good returns on investment. Smart investment strategy implemented by fund managers have helped it achieve its goal, and it could be a good investment option for individuals looking for long term returns.

How to apply – online + distributors

Individuals wishing to invest in Franklin India Smaller Companies Fund can choose between an online and offline platform. The online investment option can be done by logging onto the official website of Franklin Templeton India and following the basic steps mentioned there. One is required to provide his/her PAN details, mobile number and bank details in order to successfully register online.

Individuals can also apply through a Franklin Templeton branch/or an authorised bank. They need to fill out an application form and provide relevant data about their scheme before submitting tit.

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