Franklin India Dynamic PE Ratio FoF: Fund review

There are very few variables which can sustain optimism in markets. Lack of clear trends in earnings growth for the past four years, high valuation of broad indices, global trade war and negative returns of systematic investment plans (SIPs) have created an uncertain situation in markets. In the wake of these realities, one should focus on schemes with low volatility and managing one’s expectations about the returns the markets can generate.

One such scheme which fulfil these criteria is Franklin India Dynamic PE Ratio Fund of Funds, managed by Anand Radhakrishnan. The scheme invests in equities and debt market instruments. The scheme increases or decreases its exposure to equities depending on the Nifty’s valuations. So, cheaper the Nifty, the higher the exposure to equities.

In its equity portfolio, the scheme is invested in the fund house’s scheme Franklin India Bluechip Fund which invests in large-sized companies. In its debt portfolio, the scheme is invested in Franklin India Short Term Income, which invests in government securities, PSU bonds and corporate debt.


A key fact which investors need to bear in mind is the scheme’s standard deviation. In a sharp contrast to large-cap schemes, which have standard deviation of 14.3, the scheme has standard deviation of 6, which indicates fairly lower volatility.

Besides this, its performance has been relatively stable and moderate. In the past seven- and 10-year period, the scheme has given 13.5% and 11% returns which may not beat large-cap returns. But the idea behind investing in the scheme is it works well for investors who expect moderate yet stable returns from the markets. Conservative investors can consider investing in the scheme with minimum 10-year view.

Current portfolio

Instrument name	Market value (Rs cr)	Holding (%)
Call Money	-3.77	-0.41
Franklin India Bluechip Fund (G) - Direct plan	364.72	39.95
Franklin India ST Income Plan (G)- Direct Plan	551.96	60.46

Returns (%)

Period	CAGR return	SIP CAGR Return	FoFs (domestic)- AVG CAGR (%)
1 Year	4.84	7.05	1.56
3 Year	10.71	8.40	9.47
5 Year	11.82	9.21	11.13

Returns peer comparison (%)

Scheme	1-year	3-year	5-year
ABSL Asset Allocator FoF Scheme	-0.91	10.26	14.90
ABSL Balanced Advantage Fund	0.69	11.93	12.75
ICICI Pru Balanced Advantage Fund	2.13	10.90	12.73

Source: Accord Fintech, compiled by ETIG data base

Expert Take
Harshvardhan Roongta,
CFP, Roongta Securities

The scheme follows the mantra: higher the PE, lower the equity allocation. This strategy is highly recommended for investors as it enables an automatic asset allocation and re-balancing of investments based upon valuations. The theory of buying low and selling high can be achieved via fund of funds like these. Investors considering lump sum investments for more than five years time horizon can invest in this scheme.