An ability to navigate volatile markets well and keep up a quality stock bias has helped this fund ascend from a four-star to a five-star rating in the last couple of years. This fund invests in stocks with a market cap below that of the 100th stock in the CNX 500 index. Like all Franklin equity schemes, the style is bottom-up and hunts for growth at a reasonable price. The manager looks for 'quality compounders' - companies which can compound their earnings at a high rate, with good return on capital, low capital intensity and capable management. Businesses that do not have the ability to generate free cash flows over a business cycle are avoided. So are those with poor return on capital and limited entry barriers.
The fund's one-year returns haven't been top of the charts, but the three- and five-year records more than make up for this. The fund outpaced the category by over 9 percentage points over 3 years and 6 percentage points over five years. Launched in the frothy markets of 2006, the fund delivered erratic returns until 2008, but has pulled up its socks thereafter. The fund took a bad knock in the 2008 meltdown but has weathered the last two bear phases (2011 and 2013) extremely well, doing far better than the benchmark and the peers.
Its conservative tendencies, both on business risks and valuations, may lead to missing out on short-term market moves. It's a good choice for investors looking for a less bumpy ride with small caps.
Top 10 Tax Saver Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
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