If you are looking for a fund with a dividend-yield focus and international diversification, then Templeton India Equity Income Fund (TIEIF) would fit your bill well.

The fund offers overseas equity exposure, largely to sectors where there are limited opportunities to invest in in the Indian market and has a value-based approach with a focus on high dividend-yielding stocks.

Both these strategies hold significant investment appeal in the markets now.

Suitability: A motley mix of global and local stocks combined with its investment approach can be expected to help the fund deliver steady returns over the years.

The fund, however, is best suited as a portfolio diversifier, given its conservative investment approach and allocation to international equities.

Investors may also do well to temper their returns expectation in bull markets as the fund's investment strategy may not yield top-of-the-chart returns. It, however, makes for a safe play in volatile and correcting markets.

Performance: Over one-, three- and five-year periods, the fund has managed to return nearly -11 per cent, 21.5 per cent and 11 per cent, respectively.

While it has trailed its benchmark marginally over the year, it has outpaced it over longer time frames by a decent margin.

However, the fund's performance vis-à-vis established domestic dividend yield funds hasn't been as impressive. It has lagged peers such as Birla Sun Life Dividend Yield and UTI Dividend Yield over these periods.

That dividend yield as an investment theme has returned surprisingly well in the last few years in India could have weighed in their favour as against TIEIF, which also has exposure to foreign equities.

TIEIF, however, has access to a bigger universe of ‘dividend-yield and value' stocks in terms of its exposure to overseas markets.

Focus on ‘value' has also helped the fund avoid momentum plays, due to which it tends to do well during downturns that follow an indiscriminate rally.

For instance, from January 2008 highs to the March 2009 lows, the fund managed to limit its losses to 57 per cent, better than both the Sensex and its benchmark.

Portfolio: The domestic component of the portfolio, which predominantly features large-cap stocks, currently makes up about 66 per cent of its portfolio.

Of that, large caps account for about 41 per cent. The fund, however, does sport select stocks from the mid- and small-cap space as well (such as ING Vysya Bank, MOIL, Sundaram Finance, and Tata Investment Corp).

The fund's stock picking strategy is largely bottom-up and hence it's not uncommon to find select stocks accounting for more than 5 per cent of its portfolio.

The sector exposures therefore aren't planned; they are incidental. In terms of sector exposure, the fund now sports a high exposure to banks, financials, and metals. Interestingly, over the years, TIEIF's portfolio hasn't undergone a lot of change but for some periodical rebalancing.

The fund's overseas exposure is spread across markets such as China/Hong Kong, Taiwan, Korea and Turkey.

At 30 per cent, the foreign equity exposure straddles sectors such as consumer durables (Samsung Heavy Industries), semi-conductor (United Microelectronics Corporation), finance (IS Yatirim Menkul Degerler AS), retail (Lotte Shopping) and minerals and mining (Anglo American PLC), to name a few.

KT & G Corporation (Korean cigarette company) and Sinotrans (Chinese shipping company) are some of its latest additions.

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