Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. [EasyDNNnews:PaidContentStart]

Reason for recommendation
Investing in Asia-dedicated funds offers you an excellent opportunity to diversify your portfolio and tap into the region’s robust economic growth, technological advancements, and attractive valuations. By allocating funds to a large part of Asia, you can take advantage of these opportunities while reducing the risks associated with domestic market fluctuations. Hence, our choice of MF Select this time is Franklin Asian Equity Fund–Direct Plan. Over its 12-year history, the fund has delivered an annualised average annual return of 7.26 per cent. In the short term, it has performed well with a one-year return of 10.3 per cent.

One of the reasons for such low returns in the longer run is the underperformance of China’s equity market where it has a major holding. Nonetheless, in the last one year, the scenario has been changing for the better in China’s equity market and hence, going ahead, we may see better returns by the fund. The fund has aimed for long-term capital appreciation, particularly through investments in Asian companies (excluding Japan), and has doubled investors’ money roughly every 10 years since its inception.

In terms of asset allocation, the fund has a heavy emphasis on Large-Cap stocks (83.5 per cent) and focuses on foreign equities (62.07 per cent). The top holdings are dominated by major technology and financial companies such as Taiwan Semiconductor, Tencent and ICICI Bank. Sector-wise, it is largely concentrated in technology (22.73 per cent), financials (19.53 per cent), and services (19.53 per cent). These sectors are vital for long-term growth.

The fund is managed by experienced fund managers Sandeep Manam and Shyam Sundar Sriram. The fund is a viable option for those with a longer-term investment horizon willing to accept higher volatility.

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