Franklin India Taxshield Fund

• Investment Style: Large Growth
• Investment Process: A research-driven investment approach with a focus on reasonably valued stocks
• Fund Manager: Lakshmikanth Reddy
• The fund is helmed by Lakshmikanth Reddy, who joined the fund company on May 2016, with R. Janakiraman as the named comanager.

While earlier it had a more definite mandate of investing around 70% in large-cap stocks and 30% in small/mid-cap stocks, it is now managed with a flexi-cap approach, which enables the manager to invest without paying heed to the benchmark index, market cap, or any specific style of investing. The change in the strategy is largely to align it with Reddy's skill-sets and to capture wider range of investment opportunities in the fund. Although the investment team has a reasonably good track record in running flexi-cap strategies, which is positive, it should be noted that it will also change the fund's risk/reward profile going ahead. Further, the changes here have made the fund's past track record less relevant.

Earlier, the fund's Morningstar Analyst Rating of Gold was driven by our conviction in Radhakrishan's managerial skills and his ability to execute the strategy with a good degree of precision. Reddy, on the other hand, shows promise, but his execution capabilities remain untested, which is critical for the success of this fund given the nature of its strategy. Hence, in our opinion, a downgrade here is inevitable.

That being said, Reddy's extensive research experience will aid him in his job. Furthermore, he is supported by a close-knit investment team that ranks among the best in the industry. We are fairly impressed with its disciplined investment approach and believe that it should hold the fund in good stead. Therefore, despite the downgrade, the fund merits a positive rating.

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