FT India Life Stage Funds - 20s Plan - Promise of potential
Aarati Krishnan Looking for a lower-risk alternative to a pure equity fund? The 20s plan of Franklin Templeton's Life Stage Fund of Funds may fit the bill. The FT Life Stage 20s Plan is among the better performing equity oriented funds of 2008 - its NAV has lost 39 per cent for the year. That may seem an unimpressive show in absolute terms, but still much better than the equity fund category, which has lost 55 per cent in value for the year. This is mainly explained by the fund's large-cap orientation and a 20 per cent debt exposure, which has protected capital. The fund's performance holds potential to improve on two counts. Over a two-three year period, the fund's 65 per cent exposure to tried and tested, large-cap oriented equity funds, Franklin India Bluechip and Templeton India Growth Fund, may help it participate in any stock market recovery. The 20 per cent debt exposure - which is split between Templeton India Income Builder and Income Fund - is also likely to deliver better returns in the falling interest rate regime over the next year or so. Suitability: The fund's 80:20 allocation between equity and debt and its bias towards large-cap funds makes it a suitable option for investors with a three-year horizon, who would like to limit downside risk. However, with 80 per cent equity exposure, the fund does carry a fair dose of equity-related risks and shouldn't be bought by investors with a limited ability to take losses. The fund re-balances its portfolio to maintain this fixed allocation, at six-month intervals. Individual investors may find it difficult to implement such a regular rebalancing on their own. Performance: The Life Stage 20s Plan has managed to beat its balanced benchmark by a margin over one, three- and five-year time frames. However, its performance in the bull market was modest relative to pure equity funds, with the fund's three-year return at about 30 per cent at the beginning of 2008. This placed it below the second quartile among equity funds, in terms of returns. The fund's ability to contain downside well in the choppy markets of 2008 has, however, given it a leg up in the recent return rankings. The 39 per cent NAV decline in 2008 places it among the top five equity oriented funds for this year. The return numbers until this year largely reflect the performance of the equity funds, Franklin India Bluechip and Templeton India Growth Fund, both of which have contained declines well relative to peers in 2008. The debt funds which figure in the portfolio - Templeton India Income Fund and Income Builder Account - have delivered only a muted performance in 2008 with a 6-7 per cent return; much lower than peers in this space. A very conservative strategy of maintaining a low portfolio maturity in recent months appears to have limited the potential for gains from tumbling bond yields. However, given that the interest rate environment is likely to remain benign for some months to come, there appears to be potential for improvement in returns through a more aggressive stance over the next few months. Fund facts: FT India Life Stage schemes are fund of fund products that offer different asset allocation patterns to investors based on their age profile. http://www.thehindubusinessline.com/iw/2009/01/04/stories/2009010450261000.htm --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
<<inline: 2009010450261001.jpg>>
