Franklin India Bluechip Fund Analysis

Franklin India Bluechip Fund is an open ended growth equity fund which primarily aims to provide medium to long term capital appreciation. The benchmark index for this fund is BSE Sensex. As of 30th June 2015, the asset under management or AUM of Franklin India Bluechip Fund was around Rs 6400 crores.

Franklin India Bluechip Fund was launched in December 1993. It has been in existence for almost 18 years and this gives us a very rich set of data to analyze the performance of Franklin India Bluechip over various time periods.

To know more about the scheme objectives and key features, read this.

Franklin India Bluechip Fund, being an equity oriented fund is 93% invested in stocks, with balance 7% in cash and cash equivalents. To know more about its composition read this.

The Top 5 Holdings of Franklin India Bluechip Fund are as below.

Together they account for 33% of the funds corpus.

Methodology of the Analysis

  • First I obtained daily NAV data of Franklin India Bluechip Fund from inception of the fund. The data is from Dec 1993 to Aug 2015. I downloaded the data from Franklin India website here.
  • Then I estimated the rolling 1 year, 2 years, 3 years, 4 years, 5 years, 6 years and 7 year returns.
  • After that, I calculated a number of simple but informative statistical formulas on the returns data.
    – Average, Maximum and Minimum Returns.
    Standard Deviation – This gives us an indication of the variability of the data.

Franklin India Bluechip Fund – 1 Year Returns Analysis

Franklin India Bluechip Fund - 1 Year Returns AnalysisAverage 1 year rolling return is 23%. However standard deviation is a massive 41%, which indicates a huge variability.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • There is a 68% probability that returns could be between -19% and 64% in any 1 year period which is not at all helpful.
  • There is a 95% probability that returns could be between -60% and 105% in any 1 year period.
  • In other words anything can happen in a 1 year period. There is no predictability.

Franklin India Bluechip Fund – 3 Years Returns Analysis

Franklin India Bluechip Fund - 3 Years Returns AnalysisAverage 3 year rolling return is 20%, which is 3% lower than 1 year returns. However standard deviation has now come down by half to 20%, which is still high

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • There is a 68% probability that returns could be between -2% and 38% in any 5 year period.
  • There is a 95% probability that returns could be between -22% and 58% in any 3 year period. Although an improvement over 1 year rolling returns, there is still a lot of variability.

Franklin India Bluechip Fund – 5 Years Returns Analysis

Franklin India Bluechip Fund - 5 Years Returns AnalysisAverage 5 year rolling return is 18% lower than 3 years average rolling returns of 20%. However standard deviation has now come down further to 13%.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • A person who invests in Franklin India Bluechip Fund can say with 68% certainty that he would make at least 6%, which is same as post tax Fixed Deposit returns.
  • There is a 95% probability that returns could be between -7% and 44% in any 5 year period.

Franklin India Bluechip Fund – 7 Years Returns Analysis

Franklin India Bluechip Fund - 7 Years Returns AnalysisAverage 7 year rolling return is 19%, almost same as 5 years average rolling returns. However standard deviation has now come down further to 10%, which is manageable.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • There is a 68% probability that returns could be between 9% and 29% in any 7 year period. Not bad at all.
  • In any 7 year rolling period, there is a 95% percent chance that the lowest returns would be -1%. The lowest historical 7 year return has been 0%, which implies that on a 7 year basis historically the worst an investor has done is not making anything; but there has been no capital destruction.

Conclusion

Predictability of returns of Franklin India Bluechip Fund seem to increase with increased holding period, accompanied by a reduction in variability.

Long term returns (7 years) for this fund has been around 19%, with a maximum of 37% and minimum of 0%. Franklin India Bluechip Fund has outperformed Franklin India Index Fund Nifty Plan whose long term returns (7 years) have been around 16%, with a maximum of 29% and minimum of 3%.

You may also like

A Few Last Words

Before making any investment decision, please contact your financial adviser.

I do not own this mutual fund.

I am not registered with SEBI under SEBI (Research Analysts) Regulations, 2014. I do not offer any opinion concerning securities or public offers. Whatever analysis I provide is through public media only on Mkerj. I am not covered under RA Regulations.

I have provided this article for educational purpose only.

I hope you found this article on Franklin India Bluechip Fund useful. If you have something to add please leave a comment in the post. Please feel free to contact me.

Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>