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  1. 1. -485775-333375<br /> <br /> <br /> FIM ASSIGNMENT<br /> PERFORMANCE ANALYSIS OF<br />FRANKLIN INDIA TAXSHIELD FUND<br /> <br /> PREPARED BY : DIPTAKSHYA BANERJEE <br /> ROLL NO- 76<br />SUBMITTED TO: Prof. PRADIP BANERJEE<br /> <br /> ACKNOWLEDGEMENT<br />Putting this assignment was a stimulating challenge for me. It is my privilege to record my deep sense of gratitude and indebtness to the subject faculty for giving me this assignment. <br /> I give a special thanks to Prof. Pradip Banerjee for his assistance and support in completing this assignment. Without his encouragement this assignment would not have seen the light of the day.<br />I would also like to express my thanks to all those people who directly or indirectly contributed to the completion of my assignment. <br />FRANKLIN INDIA TAXSHIELD (FIT) <br /> <br />FUND MANAGER: Anand Radhakrishnan (since Apr. 2007)<br />WHEREABOUTS OF THE FUND MANAGER: Mr. Anand Radhakrishnan is Vice President and Portfolio Manager – Equities for Franklin Templeton Asset Management (India) Pvt Ltd. Mr.Radhakrishnan manages Franklin India Blue-chip Fund, Franklin India Taxshield, Franklin India InfoTech Fund, Franklin India Pharma Fund and equity portfolio of all Hybrid Funds. Also, he is a co-portfolio manager for Franklin India Prima Plus and Franklin India High Growth Companies Fund.<br /><ul><li>Work Experience: Mr. Radhakrishnan has been in the investment management Industry since 1994. Prior to joining Franklin Templeton, Mr. Radhakrishnan worked as a Fund Manager, Sundaram Mutual Fund for 8 years. Prior to that, he worked for SBI Funds Management Ltd as a Deputy Manager, Equity Research.
  2. 2. Academic Background: Mr. Radhakrishnan earned his Post Graduate Diploma in Management from Indian Institute of Management, Ahmadabad in 1994. He earned his Bachelor of Technology degree, specializing in Chemical Engineering from Anna University, Chennai in 1990. He is a CFA charter holder.</li></ul>INVESTMENT STYLE: The fund manager seeks steady growth by maintaining a diversified portfolio of equities across sectors and market cap ranges.<br />FUND OBJECTIVE & STRATEGY: The scheme seeks medium to long term growth of capital with income tax rebate. The scheme invests in equities and there is an exposure to PSU Bonds and debentures and Money Market instruments.<br />FUND TYPE: Equity Linked Savings Scheme (ELSS)<br /> FUND EXPLAINATION: Equity linked saving schemes are a kind of mutual funds like diversified equity funds with Tax benefits. It is just like other tax saving instruments like National Savings Certificate (NSC) and Public Provident Fund (PPF). Main advantage with ELSS is lock-in period is only 3 years while for NSC it is 6 years and for PPF it is 15 years. At the same time risk factor is high in ELSS.<br />Tax Benefits: As per Income Tax act 80C investment up to Rs 1, 00,000 are eligible for deduction from the gross total income hence reducing the total taxable income. For example if your total annual income is Rs 3,00,000 and you invest Rs 1,00,000 in ELSS then your taxable income will become Rs 2,00,000. <br />Previously there was an upper limit for investing in tax saving instruments like ELSS of Rs5, 00,000. Only individuals with less than Rs5, 00,000 annual incomes are allowed to invest in tax saving instruments. But last year financial budget removed this restriction and now any individual can invest in ELSS irrespective of their income level.<br />Advantages of ELSS:<br />1. Main advantage of ELSS is its short lock-in period. Maturity period of NSC is 6 years and PPF is 15 years. <br />2. Since it is an equity linked scheme earning potential is very high.<br />3. Investor can opt for dividend option and get some gains during the lock-in period<br />4. Investor can opt for Systematic Investment Plan<br />5. Some ELSS schemes also offer personal accident death cover insurance<br />6. Provides 30 to 40% returns compared to 8% in NSC and PPF <br />Disadvantages of ELSS:<br />1. Risk factor is high compared to NSC and PPF<br />2. Premature withdrawal is not allowed but it is allowed in other instruments in some specific conditions. <br />Diversified Equity Schemes and ELSS:<br />Both Equity linked saving scheme and diversified equity scheme operates in same way. Both are high return and high risk schemes. But there is a 3 year lock in period of ELSS and it provides tax benefits too.<br />Systematic Investment Plan (SIP): <br />Best way to invest in ELSS is through Systematic Investment Plan (SIP). With SIP one can invest a small amount every month for a specific time period. With SIP investor can take advantage of fluctuations in the stock market. So investor will get more units when the market is down and get fewer units when the market is up. Also most of the Asset Management Companies (AMC) charges less entry load for SIP compared to normal purchase.<br /> FUND DATA<br /><ul><li>FUND TYPEEquity Linked Savings Scheme(ELSS)DATE OF INCEPTIONApril 10, 1999FUND SIZERs. 609.85 croresPORTFOLIO TURNOVER72.53%MINIMUM INVESTMENT/MULTIPLES FOR NEW INVESTORS: Rs.500/500LOAD STRUCTURE: Entry Load - 2.25%Exit Load- NilELIGIBILITY Individuals HUFs Minors Association of PersonsCompany Trust</li></ul>DETAILS ABOUT THE INVESTMENT OF FUND: <br />ASSET ALLOCATION<br /> LINK Excel.Sheet.8 " C:ocuments and SettingsIPTAKSHYA BANERJEEesktoputual Fundalculations.xlsx!Sheet2![calculations.xlsx]Sheet2 Chart 4" " " a p <br />SECTORAL ALLOCATION<br /> LINK Excel.Sheet.8 " C:ocuments and SettingsIPTAKSHYA BANERJEEesktoputual Fundalculations.xlsx!Sheet1![calculations.xlsx]Sheet1 Chart 3" " " a p <br />PORTFOLIO OF EQUITY (as on Jun 30, 2009)<br /> LINK Excel.Sheet.8 " C:ocuments and SettingsIPTAKSHYA BANERJEEesktoputual Fundalculations.xlsx!Sheet3![calculations.xlsx]Sheet3 Chart 3" " " a p <br /> FUND PERFORMANCE<br />TIME ZONE BEST (PERIOD) WORST (PERIOD) MONTH57.81 (03/12/1999 - 04/01/2000)-29.18 (24/09/2008 - 24/10/2008) QUARTER137.13 (22/11/1999 - 22/02/2000)-34.66 (02/09/2008 - 03/12/2008) YEAR214.23 (10/05/1999 - 09/05/2000)-51.50 (14/01/2008 - 13/01/2009)<br /> COMAPARATIVE PERFORMANCE ANALYSIS & RANKING<br /> FUNDS Franklin India TaxshieldBirla Sun Life Tax PlanHDFC TaxsaverICICI Prudential Tax PlanKotak Tax SaverSBI Magnum TaxgainSahara Tax GainUTI Equity Tax SavingAVERAGE RETURN0.2550.180.300.280.080.19-0.040.16STANDARDDEVIATION0.4370.560.480.540.660.490.840.47BETA-0.30-0.4-0.2-0.37-0.7-0.40-0.78-0.52SHARPE VALUE0.40.180.460.38-0.010.23-0.150.16TREYNORVALUE-0.59-0.3-0.9-0.550.01-0.290.16-0.15ALPHAVALUE0. as per SHARPEIIVIIIIVIIIVVIIIVIRANK as per TREYNORVIIVVIIIVIIIIVIIII<br /> FUND ANALYSIS<br /> During a tumultuous 2000 which was the first year of Franklin India Taxshield’s existence, it made its mark on the returns tables. When the entire category fell by(-23.74) per cent in 2000, this fund delivered 2.11 per cent. Huge cash allocations did the trick. <br />During the bearish phases of 2001 and 2002, it fell less than the category average. In 2008, it once again managed to protect the downside and in the third quarter actually delivered 0.23 per cent, when the category average was -5.39 per cent. The cash allocation was not too aggressive and averaged at just 6 per cent during this quarter while the large-cap allocation averaged at 76 per cent. While both these factors helped to some extent, it was the sector allocations that played the important role. It maintained a higher than average allocation to financials and consumer durables, a lower allocation to energy and exited from metals altogether. <br />But despite a few misses, the fund has done well for itself. Its all-cap strategy has held it in good stead and over the past five years has delivered an annualized return of 14.63 per cent (December 31, 2008). <br />While the top 10 holdings account for almost half the portfolio, the risk is mitigated to some extent by a large-cap tilt. The fund manager also takes small exposures in a large number of stocks with many having an exposure of 1 per cent or less.<br />Though it has the unique ability to always protect the downside, it is not the most exciting offering out there. During bull runs, it has been a middle of the road performer but over the long term it beats the category average. Basically, a safe and sound offering.<br /> ASSUMPTIONS & NOTES<br /> <br /> <br /> <br /> 1. The Value of the funds in calculated from the year 1st April, 2002 till 30th June<br /> 2009 on a yearly basis.<br /> <br /> 2. The date taken to show the NAV of the respective funds is 1st April of each year.<br /> 3. The Risk-free rate is taken as 8.00% for all the funds.<br /> 4. There is a variation with the Original outcome. <br /> For e.g. Beta of Franklin India Taxshield originally is 0.90 whereas here it came<br /> -0.30. This may have happened as there are many other parameters to compute <br /> it much accurately which I could not touch upon.<br /> 5. The Benchmark index followed by these types of Mutual Funds is S&P CNX 500.<br /> CALCULATIONS <br /> <br /> <br />