After SEBI’s new fund classification system announced in October 2017, fund houses have been reclassifying and recategorising their various schemes and, in some cases, even mandates are amended. Here we track the major changes made to the prominent fund schemes of Franklin Templeton Mutual Fund. Investors, who do not wish to continue in a scheme on account of a ‘change in fundamental attribute’ such as the ones mentioned below, have time till 1st June to exit without paying an exit load. The changes will go into effect on 4th June 2018.
Franklin India Prima Plus (AUM: Rs 11,224 crore)
This large and popular multicap fund will become Franklin India Equity Fund. It will retain its multicap character. Its asset allocation limits will not change greatly except for a higher minimum equity allocation of 80% instead of the earlier 65%.
Franklin India Bluechip Fund (AUM: Rs 7,821 crore)
This prominent fund will retain the same name. It will also remain a large-cap fund but with a strict definition of the large-cap (top 100 companies only) in place. It will be mandated to hold 80% of its assets in large caps. Its benchmark will change from the Sensex to the Nifty 100.
Franklin India Flexicap Fund(AUM: Rs 2,715 crore)
This fund will be called Franklin India Equity Advantage Fund and will be classed as a large and midcap fund. It will be allowed to hold 35-65% in large caps and mid caps respectively. It can invest the balance amount in other types of companies or debt.
Franklin India Prima Fund (AUM: Rs 6,354 crore)
This fund will be classed as a midcap fund, obligated to invest 65% of its assets in companies between the 101st largest and 250th largest by market capitalisation. The benchmark will also change from the Nifty 500 and the Nifty Freefloat Midcap 100 to the Nifty Midcap 150.
Franklin India Smaller Companies Fund (AUM: Rs 7,007 crore)
The fund is currently mandated to invest in mid and small cap companies. It currently defines smaller companies as those below the top 100 by market cap in the Nifty 500. It will now be required to invest 65% of its assets, only in small cap companies, defined as those below the top 250 by market cap. The benchmark will also change from the Nifty Freefloat Midcap 100 to the Nifty Small Cap 250. In other words, the fund is likely to become a lot more ‘small cap’ than it is.
Templeton India Equity Income Fund (AUM: 1013 crore)
The dividend yield strategy in the fund will remain intact. The minimum equity requirement will fall slightly from 70% to 65%.
Templeton India Growth Fund (AUM: Rs 580 crore)
This fund will become Templeton India Value Fund, mandated to follow a value investing strategy. A value investing strategy is one which focuses on undiscovered stocks in the hope of benefiting when their value is recognised by the market. The fund is currently obligated to hold 85% of its assets in equities. This will come down to 65%. So how big is this change? Not very. A key sentence in the current investment strategy paragraph reads, “In general, the methodology adopted by TIGF is based on the bottom up value investing approach.” In other words, the change of style may just be a question of making the value component more explicit. The fund’s benchmark will change from both the Sensex and the MSCI India Value Index to just the MSCI India Value Index
Franklin India High Growth Companies Fund (AUM: Rs 7,415 crore)
This scheme will become Franklin India Focused Equity Fund, mandated to hold no more than 30 stocks. This upper limit is not currently part of its governing documents. The scheme is close to this threshold, holding just 31 stocks at present. Hence the change in the scheme will be relatively small.
Franklin India Technology Fund (AUM: Rs 195 crore)
This is technology focused sector fund will see some allocation to international tech stocks. The only major change here is a hike in the minimum equity allocation from 65% to 80%.
Franklin Build India Fund (AUM: Rs 1,170 crore)
This is an infrastructure-oriented thematic fund. It is undergoing two changes. First, there will be a hike in its minimum equity allocation from 70% to 80%. This amount must be put into infrastructure stocks. Second, the benchmark will change from Nifty 500 to S&P BSE India Infrastructure Index.
Franklin Asian Equity Fund (AUM: Rs 123 crore)
This international fund with a focus on Asian stocks will retain its character. Its minimum equity allocation will increase from 70% to 80% and most of this will have to be invested in international stocks.
Franklin India Opportunities Fund (AUM: Rs 628 crore)
This special situations fund will retain its flavour. Special situations include corporate restructurings such as mergers and acquisitions, government or regulatory changes or temporary challenges faced by companies. However, the scheme gets a minimum equity allocation of 80% compared to none at present. Its benchmark will change from S&P BSE 200 to Nifty 500.
You can find the details on the changes in Franklin India schemes here.