A feeder fund that invests in Franklin US Opportunities Fund, a multi cap fund portfolio of US based listed stocks across the market cap.
This is an open ended, fund of fund investing in the units of the fund – Franklin US Opportunities Fund.
All the investments in the India Fund feeds into the Franklin US Opportunities Fund (a USD 4.47 billion fund), which then aims to invest in leading growth companies across industries and market-capitalisation.
Please note that the Franklin US Opportunities Fund is an actively managed, multi cap fund. It benchmarks itself to the Russell 3000 Fund, which is a broad market index in the US (much like Nifty 500 in India).
The investment objective of the fund is specified as:
The Fund aims to achieve capital appreciation by investing principally in equity securities of US companies believed to possess sustainable growth characteristics and which meet growth, quality and valuation criteria. These include small, medium, and large capitalization companies with strong growth potential across a wide range of sectors that have exceptional growth potential and fast growing, innovative companies within these sectors.
The Franklin India Feeder Fund (in which you invest) currently carries an annualised expense ratio of 0.61%. This has been coming down over time. A couple of years ago it was close to 1%.
One can argue about 2 layers of cost on the fund – one for the India fund and the other US Opportunities fund. But that is the structure and Franklin is not going to change it.
From a tax point of view, the Resident Indian investor has to pay long term capital gains tax after 3 years of holding (allowing for cost indexation benefit).
Franklin India Feeder US Opportunities fund represents a multi cap, diversified portfolio. For a moderate risk inclined investor looking to diversify across international markets, this fund can be a good choice.
However, the recent launch of Motilal Oswal S&P 500 index fund provides a compelling alternative to invest in the largest 500 companies in the US.