Once upon a time in Franklin Templeton Debt Fund (2024)

Once upon a time in Franklin Templeton, there were six debt funds. They are no more!

Should you be shocked, worried, dismayed? It is a cause for all of this, but the company is giving hope. Read on about what I learned.

I attended a live webinar where Mr.Sapre put forward the views and objectives of the company.

Franklin Templeton wound up six of its debt funds, after a sudden announcement in April 2020. The Coronavirus seemed to affect more than health.

I am not an expert on financial asset management, but mutual funds are something I invest in. Looking at stories like this gets me worried as an investor.

But in difficult times, it’s essential to stay calm, avoid risky investments and knee-jerk reaction,

Talking to your financial advisor is a good idea. Until the COVID crisis gets over and the economy improves, we can but pray. I don’t know how other people keep their money alive, but I hope working hard and praying hard helps. Because with COVID and China’s lies, innocent people are suffering.

I believe whatever goes down comes up. At least that’s what the economies over the world have shown. I rarely invest in ultra-low duration or low duration funds.

The panic is understandable when Six debt funds suddenly are wound up in this economic climate. The many schemes and bank issues have made Indians jittery about the market. But debt funds were not supposed to be this way.

What did they do?

They are winding up these six funds of Franklin Templeton.

Franklin India Ultra Short Bond Fund (FIUBF)

Franklin India Short Term Income Fund (FISTIP)

Franklin India Credit Risk Fund (FICRF)

Franklin India Low Duration Fund (FILDF)

Franklin India Dynamic Accrual Fund (FIDA)

Franklin India Income Opportunities Fund (FIIOF)

What does it mean?

Winding up is a term that broadly means these funds will stop functioning after all their holdings are sold. Meanwhile, there will be no further activity in the funds, no purchase or redemption of these mutual funds.

What they said in their official statement

These funds are wound up to protect the investments of the investors.

The money is not lost. It’s all there. The investment is secure, but giving back the money to the investors will need some time.

They are trying to get individual companies to prepay the money and by other means.

Are the equity funds at risk?

No, they are a twenty-five-year market experience in India, and they are not going anywhere.

Do the fund holders need to do anything to get back their money?

Not according to Mr.Sapre, it should be an automatic affair.

The Redemption will be a phased affair, and the company will inform the fundholders once they finalize it. The net asset values will be updated daily, and there will be no investment management fee going forward. That’s was the summary of the Franklin Templeton press release said.

“Franklin Templeton has a long history of over 25 years in India. 33 per cent of our global workforce based there. Our commitment to the market and our investors in India remains steadfast,”

-Jenny Johnson, President, and CEO of Franklin Templeton press statement that the fund issued April 23rd, 2020)

For now, it will be a good idea to avoid debt funds with credit risk, because COVID happened and the world changed.

You can check out this podcast.

Is this for the best? Will all be well?

Every nation is destined to go through periods of expansion and decline, and none is destined to rise and fall forever. Its an impermanent world and we must adapt to survive.

Ruchir Sharma The Rise and Fall of Nations

I am still investing in my PPF, NPS, mutual funds, and insurances. I hope you are too.

Some more reading

https://www.businesstoday.in/bt-buzz/news/franklin-templeton-debt-fund-crisis-when-and-how-much-money-will-investors-get-back/story/402037.html

https://www.moneycontrol.com/news/business/personal-finance/franklin-templeton-crisis-no-case-for-redeeming-other-sound-debt-funds-5185961.html

I am not an expert on financial asset management. This is an opinion piece. I am not a qualified Financial Advisor and this is not to be taken as professional financial advice. Mutual funds are subject to market risk, read all scheme-related documents carefully. All investments should be done after consultation with a financial suitable expert, according to own financial risk appetite.

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