Templeton India Value Fund, the erstwhile Templeton India Growth Fund, was launched way back in 1996. This was, in fact, one of the first products by Franklin Templeton fund-house in India. Though the fund’s name change from Templeton India Growth Fund to Templeton India Value Fund happened just last year, Franklin is well-known for practicing value-investing.
From January 1, Templeton India Value Fund saw another major change – CIO Anand Radhakrishnan is managing the fund, replacing Vikas Chiranewal. The Rs 550-crore fund could definitely use Radhakrishnan’s touch given that it lags peers in some areas. Read on to know RupeeIQ’s take.
Despite its vintage, Templeton India Value Fund never really became a big fund. Its modest Rs 550 crore assets tell you that it has been perceived by investors as a niche offering. Since the fund is an officially a value-oriented equity scheme, its stated objective is to invest in companies that are undervalued (in terms of relative valuation) and offer a potential for long-term capital appreciation.
Templeton India Value Fund remains a conservatively managed equity fund with a “Buy and Hold” strategy. It sports a portfolio turnover of a mere 13%, which is one of the lowest in the industry not just in the value fund category but also in the overall Indian equity fund universe.
The fund has consistently declared a dividend every year for the last 15 years.
Any fund is as good as its performance. There are two ways to look at performance. One is to look at how the fund has done over different time-periods, say 3-year, 5-year and 10-year etc. The second is to look at rolling returns. We will look at how the Templeton India Value Fund has done. But before we talk about performance, note that value-oriented funds should be judged over long periods of time, three to five years. They can have periods like 12-15 months when their bets do not work and that may cause under-performance.
As you can see from the performance chart below, the Templeton India Value Fund is not one of the top-performing funds in its category. For 3-year, 5-year and 10-year time periods, it actually lags the category average. Clearly, the fund has not done as good as its potential. The advent of Radhakrishnan could change that. You could always argue that Radhakrishnan has been the CIO and so has been responsible all along for the fund. Yes and no. While CIOs look after the fund family, the individual fund manager has a lot more say in day to day operations of a fund.
|YTD %||1-Month %||3-Month %||1-Year %||3-Year %||5-Year %||10-Year %|
|Templeton India Value Fund||-0.79||-0.55||1.98||-13.95||9.49||14.57||16.21|
|Value fund category||-1.35||-0.55||1.41||-10.34||10.2||17.14||18.32|
|Rank within value fund category||2||9||4||9||7||10||9|
|Number of funds in value category||17||16||16||14||14||13||11|
|As on Jan 04, 2019|
Here is the SIP performance chart of Templeton India Value Fund vis a vis some popular value funds.
|Fund name||1-year %||3-year %||5-year %||10-year %|
|Aditya Birla Sun Life Pure Value Fund||-21.71||0.78||8.61||16.56|
|Invesco India Contra Fund||-5.7||11.34||13.53||16.12|
|ICICI Prudential Value Discovery Fund||-7.8||4.2||7.93||16.05|
|Quantum Long Term Equity Value Fund||0.3||7.59||9.83||13.56|
|Templeton India Value Fund||-10.04||4.78||8.22||11.47|
|UTI Value Opportunities Fund||-6.64||6.12||6.71||10.85|
|Tata Equity PE Fund||-11.23||7.91||12.24||15.55|
As you can see, Templeton India Value Fund definitely can improve upon its SIP performance. Three-year return of less than 5% is quite bad compared to the category. Five-year return of 8.2% is also quite pedestrian from an equity fund. Many fund experts and fund managers, however, argue that point to point returns do not capture to a fund’s consistent performance. To look at that, we next look at rolling returns. Rolling returns give a more accurate and in-depth picture of a portfolio’s performance as the return is calculated every day for the period under observation.
To make a fair comparison, we have compared the Templeton India Value Fund to like sized-funds only. So, we have compared the Templeton India Value Fund with Kotak India EQ Contra, and SBI Contra Fund. While Templeton India Value Fund has a better rolling return average than the other two schemes, Kotak India EQ Contra Fund has no negative return in 3-year rolling return.
Rolling return stats for 3 year
|06-Jan-2014 to 04-Jan-2019||Return Statistics (%)||Return Distribution (% of times)|
|Fund Name||Average||Maximum||Minimum||Less than 0%||0 – 10%||10 – 20%||20 – 30%||More than 30%|
|Templeton India Value Fund(G)||15.44||26.94||-1.84||0.74||14.37||61.27||23.62||0|
|Kotak India EQ Contra Fund(G)||14.79||26.24||3.45||0||12.47||69.28||18.25||0|
|SBI Contra Fund-Reg(G)||13.86||25.25||-1.72||0.41||27||54.58||18||0|
Funds managed by Radhakrishnan
Anand Radhakrishnan is chief investment officer for Franklin Equity – India, Franklin Templeton Asset Management (India) Pvt Ltd. He is responsible for overseeing all the local equity funds. Radhakrishnan has been in the investment management industry since 1994. His past assignments include 8 years as fund manager for Sundaram Mutual Fund. He was also deputy manager in equity research with SBI Funds Management Ltd.
These are some of the funds directly managed by Radhakrishnan.
|Franklin Build India Fund||-0.4||1.71||4.71||-10.61||11.86||22.49||–|
|Franklin India Bluechip Fund||-1.27||-0.38||0.76||-5.04||9.17||12.69||15.63|
|Franklin India Equity Fund||0.96||0.09||2.15||-5.44||9.56||16.61||17.26|
|Templeton India Equity Income Fund||1.21||-2.68||-0.7||-10.18||10.2||12.87||16.96|
Returns only give half a picture. Risk stats complete the story. But even from a risk parameter point of view, Templeton India Value Fund has scope for improvement. Larger peers like ICICI Prudential Value Discovery Fund, Kotak India EQ Contra Fund and UTI Value Opportunities Fund have shown lower volatility. From a risk-adjusted return perspective too, Templeton India Value Fund lags behind category peers like Kotak India EQ Contra Fund, Invesco India Contra Fund or Tata Equity PE Fund, though the scheme appears to be good in containing ‘bad volatility’. Investors who have so far held Templeton India Value Fund have a reason to rejoice, now that the fund-house is giving you the CIO himself as the fund manager. Radhakrishnan’s distinguished track record has made him one of the successful fund managers in India, though he remains quite under-rated.
Disclaimer – Please note that investors are requested to consult their financial, tax and other advisors before taking any investment decision.