December 4, 2018

Franklin India Bluechip Fund Completed 25 Yrs – If I had invested stories!

On 1st December 2018, Franklin India Bluechip Fund completed 25 Yrs. It may be a proud moment for a fund house, fund managers or investors who holding this fund.

Franklin India Bluechip Fund Completed 25 Yrs

Also, it may be proud moments for sellers (IFAs, Bank Relationship Managers or anyone into selling) to showcase that how long-term investment might have created the wealth if you STAYED invested in this fund.

Stories like below:-

Two mutual funds complete 25 yrs today. Franklin Bluechip (Large Cap) and Franklin Prima (Midcap) launched on 1st Dec 1993. If one had invested 1 lac on 1st Dec 1993, value today is

Franklin Bluechip: 1.03 cr (20.45% CAGR)

Franklin Prima: 88 lacs (19.67% CAGR)

Tax-free, Anytime Liquid, Transparent and regulated.

They underwent all the pains such as currency crisis in 1997, dotcom bust in 2000, terror attack in the US in 2001, the recession of 2008, economic slowdown of 2012-13, all scams, all the peaks, and troughs and still delivered the best returns that they could.

Certainly, it is a pride moment for a fund house, advisers who recommend this fund and to the investors who have this fund in their portfolio.

However, many AMCs, middlemen and investors fail to understand the realities behind such stories.

Franklin India Bluechip Fund Completed 25 Yrs – If I had invested stories!

# How many investors stayed invested?

The biggest question one must ask before showing such rosy picture is that how many investors stayed invested throughout the period of 25 years of the fund.

According to AMFI report, around 30% of investors ONLY hold their equity mutual funds for more than two years. Rest around 70% redeem or switch to other funds in the mad dream of CHASING RETURNS.

As someone rightly pointed above, during these 25 years journey, you faced the situations like currency crisis in 1997, dotcom bust in 2000, terror attack in the US in 2001, the recession of 2008, economic slowdown of 2012-13, all scams, all the peaks, and troughs and still delivered the best returns that they could.

Do you really have a GUTS to stay invested during such BLOODBATH in the market? Easy to say YES during the booming market but hard to stick during crashes.

Remember, investment is more of a BEHAVIOR and RISK management. The real picture of few AGGRESSIVE investors will come into picture when they see around 10% to 15% fall in their portfolio.

# AMC changed, Fund Managers changed and Fund name itself changed!

If you look back the history of Franklin India Bluechip Fund, it is not actually launched in 1st December 1993 by Franklin AMC. The original fund name was Kothari Pioneer Bluechip Fund, which is owned by Kothari Pioneer AMC.

Later on in the year of 2002, Kothari Pioneer AMC was acquired by Franklin Templeton India AMC. Hence, the name changed from Kothari Pioneer Bluechip Fund to Franklin India Bluechip Fund.

If you are interested to know more about this story, then read THIS MINT article.

# Whether you are capable of investing at that time?

Assuming, I am 45 Yrs old now. Then at the time of launch of this fund, my age was 25 Yrs. Whether my income in 1993 was that much to stay invested of around Rs.1 lakh in a SINGLE equity fund?

Whether we have the same penetration of equity or equity mutual funds in the year 1993?

If we assume 8% inflation, then 25 years Rs.1 lakh will be today’s Rs.6.85 lakh. Do you have this much money to invest in equity asset and that also in a single fund NOW? If your answer is YES, then point at your parents, grandparents or even at yourself that you all did a mistake.

Good professional income during 1993 period may be around Rs.10,000 rupees.

# Blaming yourself, parents or grandparents

Well, we surely start to blame ourselves, parents or our grandparents that we did the biggest mistake by not investing into this fund 25 years ago.

However, many people unable to understand what was the situation during the 1990s. Even now also we fear of investing in equity and for most Indian investors it is an untouchable asset. We are happy with our real estate and gold.

Hence, it is not fair to blame that we MISSED the bus. Investment opportunities were there in the past, are here NOW and WILL remain in future also. It is YOU who has to understand what is BEST suitable to you.

# Stories are created to SELL

Such stories are created to sell the products. The best way is to take certain data point, which is suitable to show a rosy picture about equity and make investors to believe.

Forget about investors, how many advisers are there who stayed in the Mutual Fund Industry for 25 years?

Franklin India Bluechip Fund Completed 25 Yrs – So one must not believe in such stories?

I never said that this fund completed 25 years. I never said that this fund consistently generated good returns. However, what I am trying to say is that, try to understand what requires in YOU to be stick to investing for 15 years or 25 years in a single asset class or a single fund.

It requires a tremendous willpower, behavior control and guts to stay invested for so long. Acquire these skills at first rather than BLINDLY chasing such stories or returns.

19 Comments

  1. WONDERFUL AND SIMPLE LANGUAGE

    Reply
  2. Hi Basu sir, Thanks for nice article which says just dont go by fancy words and need to observe many things.

    Reply
  3. Hi Thank you so much for sharing the best information on this topic. Very Excellent article and all points are indeed very well covered.

    Reply
  4. Your articles in general and particularly this one is very educative and eye opener.
    Thanks a lot for educating lay man.
    Look forward to more such articles.
    Can we suggest topics?

    Reply
    • Dear Dipak,
      Thanks for your kind words. Surely you can suggest a topic.

      Reply
  5. Very nice article Basu.
    The power of mutual fund is nicely demonstrated.
    Talking about 25 years of a fund, compare that with an LIC policy which they sell it for a comparable term.
    Would we even get peanuts?

    Reply
    • Dear Pradeep,
      Definitely Equity has an edge over debt for long term. However, LIC products are considered as debt products and compare those with equity is unfair.

      Reply
  6. Hi.Nice thoughts.But solid stocks far better than Mfunds.If I Had invested 1 lakh in Atul Auto like Vijay Media in 2004 I would have got 32 crores by now in 15 yrs!Best to stay out fo mfunds.Next multibagger is Orient Refractories.

    Reply
    • Sorry 1 lakh Atul Auto 2004 =3.2 crore now in 15 yrs.

      Reply
      • Better to bet your house on 50 stocks than on a single stock for 15 years.
        If Atul Auto was to grow from 1 Lac to 3.2 crores in 15 years, why did that guy invest only in 2004? Did he keep buying that one stock every year?

        Reply
    • Dear Suketu,
      I am laest bothered about such fancy news. I am happy with 12% returns expectation from equity.

      Reply
      • Your expectation of 12% is for what length of time. Even for 25 years a 12% return is okay?

        Reply
  7. That has been my biggest lesson from reading almost all of your posts.

    Reply
  8. Your website is a very good source of information, I am glad I found it.
    But I will not take everything here as the truth 🙂 I will verify and do my own research since that is what you want your readers to do, to think for themselves.

    Reply

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