Franklin India Smaller Companies Fund*

Transcription

1 Franklin India Smaller Companies Fund* Invest in potential leaders of tomorrow September 2018 *Please refer Slide 8 for product label.

2 Smaller Companies: A search beyond the bluechips Large Caps Top 101 Stocks INR 109 lac crores Market Cap Mid Caps Next 150 Stocks INR 24 lac crores Market Cap Small Caps Next 250 Stocks INR 10 lac crores Market Cap Nifty 500 INR 143 lac crores Market Cap India s Equity Market Cap INR 157 lac crores Source: NSE, Capitalline As on 31 st Aug,

3 Smaller Companies Diverse nature of ideas Small Fish in a Big Pond Big Fish in a Growing Pond Different Fish in Different Pond 2

4 Small Fish in a Big Pond Competing through market share gain Smaller sized businesses in large conventional sectors Banks Utilities Energy Information Technology Materials Growing through market share gain Often differentiated from the larger players Regulations generally tend to play a crucial role in large conventional sectors 3

5 Big Fish in a growing pond Competing through market growth Leaders in their space Media and Entertainment sector Ancillary manufacturers Niche Engineering companies Logistics Growing with the sector A mix of regulated and not so regulated (Some sectors/companies are more regulated as compared to others) 4

6 Different Fish in Different Pond Businesses at different stages of evolution Innovating and creating distinct businesses Internet led businesses Retail and consumption sectors Unique services Exploring new opportunities Entrepreneurship led models 5

7 Smaller Companies Offering a variety Nifty 100 Nifty Smallcap 250 Exposure (total sectors) Concentration Weightage In top 5 sectors 80.89% 55.64% Nifty Smallcap 250 is more diversified vis-a-vis the Nifty 100 Index at both sector and stock levels Smallcaps are represented by Nifty Smallcap 250 and Large Caps are represented by Nifty 100 Source: As on 31 st August

8 Why Smaller Companies throw opportunities? The Information Gap Nifty 100 Nifty Smallcap 250 Average Number of Analysts tracking a stock 8 33 Over 58% of Nifty Smallcap Stocks are tracked by < 10 Analysts Smaller Companies are represented by Nifty Smallcap 250 and Large Caps are represented by Nifty 100 Source: IIFL as on 31 st Aug 18 7

9 Presenting Franklin India Smaller Companies Fund Product Label This product is suitable for investors who are seeking* Long term capital appreciation A fund that invests primarily in small cap companies *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. 8

10 About the Fund 9

11 Investment Style Box Investment Style Growth Blend Value Large Mid Market Cap Small 10

12 True to its label Franklin India Smaller Companies Fund (FISCF)- (Allocation to Large Cap, Mid Cap and Small Cap) Average Allocation to small caps has been 41% in the last 10 years 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Aug -08 Feb- 09 Aug -09 Feb- 10 Aug -10 Feb- 11 Aug -11 Feb- 12 Aug -12 Feb- 13 Small Cap Mid Cap Large Cap Aug -13 Feb- 14 Aug -14 Feb- 15 Aug -15 Feb- 16 Aug -16 Feb- 17 Aug -17 Feb- 18 Aug -18 Source: As per the internal classification till Dec Market capitalization is as per AMFI classification since Jan Data is as on Aug 18. Month end data from Aug 08 Aug 18 is taken for calculations. The graph shows large cap, mid cap and small cap break as a % of the total equity. 11

13 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Well Diversified Portfolio Franklin India Smaller Companies Fund In the last 10 years on a monthly average Allocation to top 3 sectors 62% Stocks held in the portfolio 60 0 Top 3 Sectors (%) No. of Stocks Source: Factset. Data taken from Aug 08 to Aug

14 Scheme Performance As on August 31, 2018 Scheme NAV as on Aug 31, 2018 Returns Compounded Annualised Growth Rate Performance (%) Last 1 Year Last 3 Years Last 5 Years Since inception Current Value of Investment of Rs Inception Date Past performance may or may not be sustained in future. Fund Managers: FIPF/FISCF: R. Janakiraman (Managing Since 11-Feb-08) & Hari Shyamsunder (Managing Since 02-May-16), FIT: Lakshmikanth Reddy (Managing Since 02- May-16) & R. Janakiraman (Managing Since 02-May-16), FIEF: Anand Radhakrishnan (Managing Since 31-Mar-07) & R. Janakiraman (Managing Since 01-Feb-11), FIEAF: Lakshmikanth Reddy (Managing Since 02-May-16) & R. Janakiraman (Managing Since 21-Feb-14), FIOF: R. Janakiraman (Managing Since 01-Apr-13) & Hari Shyamsunder (Managing Since 02-May-16). B: Benchmark. AB: Additional Benchmark. N.A.: Not Applicable. The FISCF fund manager R. Janakiraman & Hari Shyamsunder manages 6 & 3 schemes of Franklin Templeton Mutual Fund respectively. Period for which scheme s performance has been provided is computed basis last day of the month-end preceding the date of advertisement. Different plans have a different expense structure. The performance details provided herein are of Regular Plan. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of these funds are not strictly comparable. Please refer to for details on performance of all schemes (including Direct Plans). # Index adjusted for the period February 21, 2000 to March 10, 2004 with the performance of ET Mindex and for the period March 10, 2004 to June 4, 2018 with the performance of S&P BSE 200. ## Index is adjusted for the period December 1, 93 to May 20, 2013 with the performance of Nifty 500 and for the period May 20, 2013 to Jun 4, 2018 with the performance of Nifty Midcap 100. ^^ Index adjusted for the period January 13, 2006 to June 4, 2018 with the performance of Nifty Midcap 100. ^^^ As the scheme was launched before the launch of the benchmark index, benchmark index figures since inception are not available. Benchmark returns calculated based on Total Return Index Values. ***The features of few Schemes including category of schemes (like Scheme Name, Investment Objective, Benchmark etc.) has undergone changes with effect from June 4, For details, please refer '@ As TRI data is not available since inception of the scheme, benchmark performance is calculated using composite CAGR in FIT: * Nifty 50 PRI values from to and TRI values since ; FIPF: $ Nifty 500 PRI values from to to , Nifty 500 TRI values from to May 20, 2013, Nifty Midcap 100 TRI values from May 20, 2013 to June 4, 2018 and Nifty Midcap 150 TRI values since June 4, 2018, * Nifty 50 PRI values from to and TRI values since ; FIEF: Nifty 500 PRI values from to and TRI values since , * Nifty 50 PRI values from to and TRI values since ; FIOF: $ ET Mindex PRI values from to , S&P BSE 200 PRI values from to , S&P BSE 200 TRI values from to and Nifty 500 TRI values since Returns Current Value of Investment Returns of Rs Current Value of Investment of Rs Returns Current Value of Investment of Rs Franklin India Smaller Companies Fund (FISCF) - Growth % 10, % 15, % 39, % 58, B:Nifty Smallcap 250 ^^ 4.02% 10, % 14, % 30, % 52,957 AB:Nifty % 11, % 15, % 22, % 47,905 Performance of other schemes managed by the fund managers of the scheme Franklin India Taxshield % 11, % 14, % 27, % 587, B:Nifty % 11, % 15, % 25, % 196,595 AB:Nifty 50 * 19.40% 11, % 15, % 22, % 153,624 Franklin India Prima Fund % 11, % 15, % 35, % 1,001, B:Nifty Midcap 150 ## $ 9.84% 10, % 15, % 31, % 191,465 AB:Nifty 50 * 19.40% 11, % 15, % 22, % 151,405 Franklin India Equity Fund*** (FIEF) % 11, % 14, % 27, % 621, B:Nifty 500 $ 16.33% 11, % 15, % 25, % 125,655 AB:Nifty 50 * 19.40% 11, % 15, % 22, % 116,368 Franklin India Equity Advantage Fund *** (FIEAF) - Growth % 11, % 13, % 27, % 84, B:Nifty % 11, % 15, % 25, % 64,996 AB:Nifty % 11, % 15, % 22, % 66,262 Franklin India Opportunities Fund (FIOF) % 11, % 13, % 27, % 76, B:Nifty 500# $ 16.97% 11, % 15, % 24, % 17,482 AB:Nifty % 11, % 15, % 22, % 86,786

15 Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Dec-11 Aug-12 Apr-13 Dec-13 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 Dec-17 Aug-18 Serving investors for over 12 years Movement of Rs. 10,000 invested in FISCF - Growth, Nifty Smallcap 250, and Nifty FISCF: Rs. 58,109 B: Nifty Smallcap 250: Rs. 52,957 AB: Nifty 50 Rs. 47, FISCF B: Nifty Smallcap 250 AB: Nifty 50 Past performance may or may not be sustained in future. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Performance is as on August 31, B: Benchmark, AB: Additional Benchmark. Inception date: Benchmark Index adjusted for the period January 13, 2006 to June 4, 2018 with the performance of Nifty Midcap 100. Benchmark values calculated based on Total Return Index Values The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

16 Absolute Returns (%) Calendar Year Performance (10) (40) (70) 2018 YTD FISCF - Growth (9) (26) (63) 56 B: Nifty Smallcap 250 (10) (4) 41 (30) (59) 79 AB: Nifty (3) (24) (51) 57 Outperformance over B 2 (15) (1) 3 (4) (23) Outperformance over AB (21) (2) (0) 27 (12) (1) Past performance may or may not be sustained in future. Inception Date: January 13, Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Benchmark Index adjusted for the period January 13, 2006 to June 4, 2018 with the performance of Nifty Midcap 100. YTD Performance is as on August 31, B: Benchmark, AB: Additional Benchmark. The superlative performance shown in 2009, 2012 and 2014 was on account of an overall sharp rise in the stock prices coupled with stock selection and fund s overweight position in outperforming sectors. Benchmark returns calculated based on Total Return Index Values The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

17 The advantage of Long term investing Franklin India Smaller Companies Fund 60.0% 50.0% 49.0% Historical instances of +ve performance Historical instances of ve performance 40.0% 93.5% 33.4% 99.8% 32.5% 100% 30.0% 6.5% 0.2% 0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% 18.4% 18.9% 18.3% 4.8% 3-Year 5-Year -0.3% 7-Year -21.3% Maximum Minimum Average Past performance may or may not be sustained in future. Period to Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Returns greater than 1 year period are compounded annualized. Note: The above table shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7) years. 16

18 The advantage of Long term investing Nifty Smallcap 250* Nifty 50** 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% 39.7% 88.9% 11.1% 99.7% 24.9% 24.4% 100% 0.3% 0% 14.3% 13.5% 13.0% 5.1% 3-Year 5-Year -0.7% 7-Year -12.5% Maximum Minimum Average 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 28.8% 97.3% 2.7% 21.8% 99.9% 0.1% 19.8% 100% 0% 10.3% 10.7% 10.4% 4.9% 3-Year 0.0% 5-Year 7-Year -5.2% Maximum Minimum Average Historical instances of +ve performance Historical instances of ve performance Past performance may or may not be sustained in future. Period to Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Returns greater than 1 year period are compounded annualized. Benchmark Index adjusted for the period January 13, 2006 to June 4, 2018 with the performance of Nifty Midcap 100. *Benchmark**Additional Benchmark. Note: The above table shows the performance on a daily rolling return basis to compute returns for respective periods (3,5 and 7 years) Benchmark returns calculated based on Total Return Index Values The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

19 Returns (%) Market Resilience (as of August 31, 2018) (10) (30) (50) (70) P1 P2 P3 P4 P5 P6 P7 P8 P9 FISCF-Growth 31 (65) 103 (22) (10) B: Nifty Smallcap (63) 108 (23) 6 43 (11) AB: Nifty (53) 73 (15) (20) Outperformance over B (21) (2) (5) Outperformance over AB (20) (12) 30 (6) (1) 2 P1: India Re-rating: 13 th Jan 06-8 th Jan 08. P2: Global Crisis Lows: 8 th Jan 08-9 th Mar 09. P3: Post Crisis Peak: 9 th Mar 09 9 th Nov 10. P4: High inflation, slow growth: 9 th Nov th Jan 12 P5: Rebound in US and QE3 buoying global rally: 30 th Jan th Jun 13 P6: Post European Crisis: 28 th Jun th Feb 15 P7: Chinese economic Slowdown: 27 th Feb th Feb 16 P8: Global Liquidity and Domestic Reforms: 29 th Feb st Aug 18 P9: Since Inception: 13 th Jan st Aug 18 Past performance may or may not be sustained in future. Returns are compounded and annualized. Load is not taken into consideration. Dividends are assumed to be reinvested and bonus is adjusted. Refer annexure for market resilience of other funds managed by the fund managers of FISCF. B: Benchmark and AB: Additional Benchmark. Inception Date: January 13, Benchmark Index adjusted for the period January 13, 2006 to June 4, 2018 with the performance of Nifty Midcap 100. The above graph depicts performance of the fund vis-à-vis benchmark and additional benchmark in the specified time periods which have displayed significant market movement due to change in domestic/global macroeconomic variables. Benchmark returns calculated based on Total Return Index Values. The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

20 SIP Returns as on August 31, 2018 If you had invested Rs every month in FISCF - Growth FISCF 1 year 3 year 5 year 7 year Since Jan 14, 2011 Total amount Invested (Rs) 120, , , , ,000 Total value as on 31-Aug-2018 (Rs) 117, , ,075 1,939,482 2,269,327 Returns -3.67% 12.44% 19.25% 23.50% 22.95% Total value of B: Nifty Smallcap 250 ^^ 118, , ,350 1,565,839 1,773,394 B:Nifty Smallcap 250 ^^ Returns -2.32% 12.76% 16.61% 17.48% 16.71% Total value of AB: Nifty , , ,533 1,442,208 1,625,363 AB: Nifty 50 Returns 24.02% 19.37% 15.43% 15.17% 14.50% Past performance may or may not be sustained in future. B: Benchmark, AB: Additional Benchmark. Inception Date: January 13, Load is not taken into consideration. Dividends are assumed to be reinvested and bonus is adjusted. The fund was launched as a closed ended scheme and was converted into an open ended scheme effective January 14, Returns over 1 year period are compounded annualized. Calculations assume investment on the 1st business day of every month. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of the fund is not strictly comparable. ^^Index adjusted for the period January 13, 2006 to June 4, 2018 with the performance of Nifty Midcap 100 Benchmark returns calculated based on Total Return Index Values The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

21 Underweight Industrials Materials Real Estate Energy Information Technology Telecommunication Services Consumer Staples Consumer Discretionary Health Care Utilities Financials In (%) Overweight Fund Facts Overweights/Underweights as on 31 st Aug Source: Factsheet as on 31 st Aug 18. Calculations are done for the portfolio vis a vis its benchmark index Nifty Midcap 100 for determining overweights and underweights. Information is historical and may not reflect current or future portfolio characteristics. The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

22 Dividend History Year Record Date Dividend Per Unit (Rs.) (A) Record Date Nav(Rs.) - Dividend Plan (B) Record Date Nav(Rs.) - Direct Dividend Plan Dividend Yield* (A/B) 2018 February % 2017 February % 2016 February % 2015 February % 2014 February % 2013 February % 2007 August NA 7% The fund was launched as a closed ended scheme and was converted into an open ended scheme effective January 14, Dividends on face value of Rs.10. Past performance may or may not be sustained in future. Pursuant to payment of dividend, the NAVs of the schemes would fall to the extent of payout and statutory levies (as applicable). *Dividend yield is mentioned for Dividend Plan. 21

23 Portfolio Composition 22 Top 10 holdings Sector Share of equity AUM Top Sector Allocation Share of equity AUM HDFC Bank Ltd. Banks 3.84% Finolex Cables Ltd. Industrial Products 2.83% Cyient Ltd. Software 2.79% Vardhman Textiles Ltd. Textiles - Cotton 2.45% Repco Home Finance Ltd. Finance 2.45% Infosys Ltd. Software 2.41% Axis Bank Ltd. Banks 2.29% VIP Industries Ltd. Consumer Durables 2.22% Voltas Ltd. Construction Project 2.09% Equitas Holdings Ltd. Finance 2.08% Total 25.46% Total (Equity) 94.95% Banks 12.25% Industrial Products 10.06% Finance 7.80% Construction 7.74% Software 7.08% Media & Entertainment 5.95% Chemicals 4.60% Consumer Durables 4.40% Consumer Non Durables 3.82% Ferrous Metals 3.35% Total 67.05% These securities represent the ten largest holdings held in the Fund as of the date indicated. All portfolio holdings are subject to change. The information stated above does not constitute an investment advice or recommendation to subscribe or transact in these securities. Sector classification based on AMFI. As of Aug 31,

24 Why invest in FISCF 1 Provides an opportunity to participate in smaller companies. Smaller companies defined as companies with market capitalization below that of 251 st Stock of full market capitalization 2 Benefit from Blend Investment style (combination of Growth and Value) 3 Portfolio focus on Bottom-up approach to stock selection strong impetus on quality 4 Long term performance record (over 12 years) 23

25 Fund Characteristics as on Aug 31, 2018 Fund Positioning A diversified equity portfolio predominantly investing in small-cap stocks. Inception Date January 13, 2006 (launched as a closed end scheme and converted into an open-end one effective Jan, ) Assets Rs crore (Aug 31, 2018) Managed by Investment Style Minimum Amount R. Janakiraman & Hari Shyamsunder. Srikesh Nair (dedicated fund manager for foreign securities) Blend of growth and value Subscription: Fresh Purchase - Rs.5,000/-. Additional Purchase - Rs.1,000/-. Redemption: Rs.1,000/-. The amount for subscription and redemption in excess of the minimum amount specified above is any amount in multiple of Re. 1/-. Benchmark Nifty Smallcap 250 (effective June 04, 2018) Volatility Measures (3 years) (Aug 31, 2018) Portfolio Turnover (Aug 31, 2018) Exit Load Standard deviation: 4.14% Beta: 0.76 Sharpe Ratio*: % 1% if the units are redeemed/switched-out within one year of allotment *Annualised. Risk free rate assumed to be 6.45% (FBIL overnight MIBOR) The benchmark of the fund has been changed to Nifty Smallcap 250 w.e.f. Jun 4,

26 Equity MFs - Positioning Thematic Asian Equity FoF Overseas Europe FoF Overseas - U.S. Thematic Technology Thematic Special Situations Thematic Infrastructure FAEF FIF-FEGF FIF-FUSOF FITF FIOF FBIF Small Cap Mid Cap Dividend Yield Value Focused ELSS Large & Mid Cap Multi Cap Large Cap Index Nifty FISCF FIPF FIT FIEAF FIEF FIBCF FIIF DIVERSIFIED TIEIF TIVF FIFEF STYLE / THEME FIIF: Franklin India Index Fund NSE Nifty Plan, FIBCF: Franklin India Bluechip Fund, FIEF: Franklin India Equity Fund, FIEAF: Franklin India Equity Advantage Fund, FIT: Franklin India Taxshield, FIFEF: Franklin India Focused Equity Fund, TIVF: Templeton India Value Fund, TIEIF: Templeton India Equity Income Fund, FIPF: Franklin India Prima Fund, FISCF: Franklin India Smaller Companies Fund, FBIF: Franklin Build India Fund, FIOF: Franklin India Opportunities Fund, FITF: Franklin India Technology Fund, FIF-FUSOF: Franklin India Feeder Franklin U.S. Opportunities Fund, FIF-FEGF: Franklin India Feeder Franklin European Growth Fund, FAEF: Franklin Asian Equity Fund 25

27 R: Risk Probability Equity MFs Risk Matrix FIF-FUSOF FIF-FEGF FAEF FIIF FIBCF FIEF FIEAF FIT FIFEF TIVF TIEIF FIPF FISCF FBIF FIOF FITF RP: Return Potential FIIF: Franklin India Index Fund NSE Nifty Plan, FIBCF: Franklin India Bluechip Fund, FIEF: Franklin India Equity Fund, FIEAF: Franklin India Equity Advantage Fund, FIT: Franklin India Taxshield, FIFEF: Franklin India Focused Equity Fund, TIVF: Templeton India Value Fund, TIEIF: Templeton India Equity Income Fund, FIPF: Franklin India Prima Fund, FISCF: Franklin India Smaller Companies Fund, FBIF: Franklin Build India Fund, FIOF: Franklin India Opportunities Fund, FITF: Franklin India Technology Fund, FIF-FUSOF: Franklin India Feeder Franklin U.S. Opportunities Fund, FIF-FEGF: Franklin India Feeder Franklin European Growth Fund, FAEF: Franklin Asian Equity Fund Note: Relative fund positioning is indicative in nature and is based on fundamental factors pertaining to relative risk return potential of 1) large caps vs mid caps vs small caps, 2) diversified vs style/theme and 3) exposure to foreign currencies. For ex: higher the mid/small cap exposure, higher the risk return potential. This is a simplified illustration of potential Risk-Return profile of the schemes and does not take into account various complex factors that may have a potential impact on the schemes. 26

28 Risk Factors 27 The information contained in this presentation is not a complete representation of every material fact regarding any industry, security or the fund and is neither an offer for units nor an invitation to invest. This communication is meant for use by the recipient and not for circulation/reproduction without prior approval. The views expressed by the portfolio managers are based on current market conditions and information available to them and do not constitute investment advice. Scheme Classification and Objective: Franklin India Smaller Companies Fund (FISCF): An open ended equity scheme which seeks to to provide long-term capital appreciation by investing predominantly in small cap companies. Load Structure: FISCF Entry Load: Nil: Exit Load: In respect of each purchase of Units - 1% if the Units are redeemed/switched-out within one year of allotment. Risk Factors: The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 27

29 Franklin Templeton Asset Management (India) Pvt. Ltd. Indiabulls Finance Centre, Tower 2, 12 th and 13 th floor, Senapati Bapat Marg, Elphinstone (W) Mumbai Tel (91-22) Fax (91-22) Franklin Templeton Investments. All rights reserved.