Franklin India Taxshield Fund: Conservative approach works

As the last date of filing income tax returns approaches, mutual fund investors look to park the sum intended for Section 80C investments in tax saving schemes. Franklin India Taxshield Fund is one such scheme, which sticks to a clear mandate of investing in large-sized companies which are not only attractive on valuations but also generate increasing cashflows.

The scheme's fund managers Lakshmikanth Reddy and R Janakiraman consistently follow a bottom-up approach in picking stocks. Almost 70% of the scheme's portfolio is dedicated to large-sized companies. This lends stability to the portfolio. Besides this, close to 25% of the scheme's portfolio is invested in mid- and small-sized companies. These companies also play a crucial role in boosting the fund's returns.

This strategy has worked for the scheme and it has beaten its benchmark, the Nifty 500 in the past one-year, three-year and five-year periods by a reasonably good margin. The scheme has delivered a return of 23.1% in the past one year, 17.6% in the past three years and 15% over the past five years, while its benchmark delivered returns of 23.7%, 16.8% and 12.5% over the same periods respectively.

In the past six months, the scheme's fund managers have invested in HUL, Bajaj Auto, Lupin and Kansai Nerolac Paints. This shows their game plan is investing in companies that have high cashflow generation, good dividend paying record, market dominance and high revenue visibility.