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Franklin India Equity Advantage Fund

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Franklin India Equity Advantage Fund
Morningstar India - 08 September 2019

Lakshmikanth Reddy is an experience manager who has 20 years of research experience, including 11 years of portfolio-management experience. He is assisted by R Janakiraman who is the comanager of the fund. The investment team at Franklin is experienced and close-knit. Reddy has strong support from an experienced and stable investment team composed of three portfolio managers and 12 analysts, of which five act as comanagers.

The investment process is research-intensive and relies heavily on a bottom up approach. Only companies with durable competitive advantages versus peers, sustainable business models, strong entry barriers, able management teams, and good corporate governance standards are included in the coverage list. This is followed by quantitative analysis in which analysts gauge firms using a combination of discount cash flow models and quantitative parameters relevant to the sector. Analysts create sector-based model portfolios, which the research head then combines to create market-cap-based portfolios. Lakshmikanth Reddy uses these model portfolios as his initial reference point. He invests in stocks he thinks have good earnings growth potential. He plies a style-agnostic approach. He would not shy away from investing in beaten-up growth stories and out-of-favour companies that face near-term headwinds but are fundamentally sound. At the same time, he wouldn’t mind paying a premium for a company offering robust growth prospect. The managers invest in stocks with a long-term horizon. Taking cash calls is not a part of the strategy.

The fund is now categorised as a “large- and mid-cap fund,” which is a shift from its erstwhile flexicap approach to comply with SEBI’s regulation on fund categorization

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