In times when markets are trading at peak valuations, it is important to look for schemes which consciously follow the principles of value investing. Franklin India High Growth Companies Fund is one such scheme which is value conscious and selects companies which are likely to deliver higher earnings growth than the market. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair follow key valuation parameters such as enterprise value, price-to-earnings' growth ratio, forward price-to-sales ratio and discounted earnings per share in selecting companies for investments. Taking into account these valuation parameters, the fund managers invest in companies that are poised for high growth in their respective sectors.
Choosing companies based on these parameters has resulted in the scheme performing very well, especially over a long period of time. In the past three-year and five-year periods, the scheme has given returns of 16 per cent and 24.6 per cent respectively, while its benchmark index Nifty 500 has given 11 per cent and 15 per cent in the same period.
At present, the scheme is largely invested in large-sized companies, which comprises almost 65 per cent of the scheme's portfolio, while the remainder is divided between mid-sized and small-sized companies. In the past six months, the fund managers have bought in value-picks which were under-performers, but are now rising. A few prominent companies are State Bank of India, Axis Bank and NTPC.
