Franklin India Tax Shield

Franklin India Tax Shield is managed by a 'celebrated' manager Anand Radhakrishnan. Anil Prabhudas joined him in Feb 2011. He has an exemplary track record. The fund seeks medium to long term growth of capital, with income tax rebate. The scheme invests in equities and there is an exposure to PSU Bonds and debentures and Money Market instruments.

Where does Franklin India Tax Shield invest your money?

Franklin India Tax Shield is a multi-cap fund. About 62.47% of the fund’s money is allocated to stocks of large companies, 30.24% to stocks of mid cap companies and 5.59% to those of small sized companies. Large cap stocks bring stable returns but it is the mid cap stocks that bring in bumper returns.

Suitable for what?
  • Creation of wealth
  • Lifestyle needs
Not suitable for what?
  • Child's education
  • Child's Marriage
  • Home Purchase
  • Planning for retiremnet
How has Franklin India Tax Shield performed in the past?

If you had invested Rs 1 lakh when the fund was launched in April 1999, your value of investments would be around Rs 23.31 lakhs. If you had invested Rs 1 lakh for 5 years, your value of investments would be around Rs 1.46 lakhs. The performance has been better or similar to other large cap mutual funds. The fund has been giving 7.91% returns for those who have stayed invested for the past 5 years.

Assume you had invested Rs 10,000 every month in Franklin India Tax Shield fund through SIP for the past 5 years today you would have around Rs 8.37 lakhs.

How will Franklin India Tax Shield perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follow their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid-sized companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

How much to invest?

Minimum one time investment is Rs 500 and minimum SIP is Rs 500 per month. You can make Franklin India Tax Shield as part of your Satellite portfolio. Core portfolio is investments that are made for your basic goals and makes up about 70% of your investment portfolio. Do not make the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.

Our recommendation for fresh investment
Recommended
Our recommendation for existing investment
Recommended
When to enter?

Now! There is no good time to invest rather than now. Do not try to time the market and especially so if it is an SIP. Do not follow news channel and other experts to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

When to exit?

There is a lock-in period of 3 years on this fund, which means that you cannot sell this fund within 3 years of your purchase date. Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

How frequently you need to monitor the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What are the charges applicable?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

No exit load applies for units withdrawn in this scheme. Expense ratio of  Franklin India Tax Shield is 2.26%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you do not withdraw within 1 year. Franklin India Tax Shield qualifies for sec 80C ELSS benefits, which means you can invest up to Rs 1 lakh a year in this fund and deduct the amount from your gross total income for computing income tax.

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