Franklin India Smaller Companies mutual fund review: Sharp decline in performance

ET Wealth collaborates with Value Research to analyse top mutual funds. We examine the key fundamentals of the fund, its portfolio and performance to help you make an informed investment decision.

HOW THE FUND HAS PERFORMED

WHERE THE FUND INVESTS

BASIC FACTS

• Date of launch: 13 January 2006
• Category: Equity
• Type: Small Cap
• AUM(As on 31 January 2022): Rs 7,209 crore
• Benchmark: NIFTY SMALLCAP 250 TOTAL RETURN INDEX

WHAT IT COSTS
NAV(As on 15 February 2022)

• Growth Option: Rs 88.32
• IDCW: Rs 35.45
• Minimum Investment: Rs 5,000
• Minimum SIP amount: Rs 500
• Expense Ratio(As on 31 December 2021) (%): 1.85
• Exit load: 1% for redemption within 365 days

FUND MANAGER
R. Janakiraman
Tenure: 13 years, 11 months

Top 5 sectors in portfolio (%)

Top 5 stocks in portfolio (%)

Recent Portfolio changes

• New Entrants: Affle (India), Anand Rathi Wealth, Data Patterns, Exide Inds, Sapphire Foods, Gateway Rail Freight
• Complete Exits: Gateway Distriparks, HT Media, Navneet Education
• Increasing allocation: Anand Rathi Wealth, Chemplast Sanmar, Exide Inds, Heidelberg Cement, Hitachi Energy, Ion Exchange, Metropolis Healthcare, Sapphire Foods, Westlife Development.

How risky is it?

Source: Value Research

Should you buy?
This small-cap fund takes sizeable exposure in mid-caps like many segment peers. The fund runs a highly diversified portfolio with modest position in its top bets. The fund manager is comfortable taking large deviations in sector positioning relative to index. The fund enjoyed a stellar track record of outperformance until 2016, consistently ranking in the top quartile among its peers. However, its performance has deteriorated sharply since. What is worrying is that the fund has lagged far behind both index and peers even in years when small-caps fared well. Its downside performance has also deteriorated in recent years, which does not bode well for the long run.