Yesterday, Franklin Templeton Mutual Fund announced winding up of six of its yield-oriented, credit funds.
Considering the continuously thinning volumes in the high-yield fixed income securities segment and incremental redemption pressure given the current state of our pandemic-stricken markets, the fund house has decided to be proactive and wind up operations in the following six schemes:
- Franklin India Low Duration Fund (No. of Segregated Portfolios – 2)
- Franklin India Ultra Short Bond Fund (No. of Segregated Portfolios – 1)
- Franklin India Short Term Income Plan (No. of Segregated Portfolios – 3)
- Franklin India Credit Risk Fund (No. of Segregated Portfolios – 3)
- Franklin India Dynamic Accrual Fund (No. of Segregated Portfolios – 3)
- Franklin India Income Opportunities Fund (No. of Segregated Portfolios – 2)
24th April 2020 onwards, all forms of transactions in these schemes will be suspended and unitholders will receive the value of their units per the Net Asset Value of the scheme in line with liquidation proceedings.
Investors are requested to take note of the following and infer it in the spirit meant to be conveyed.
- The decision of winding up these schemes must be looked at as an act of responsibility and understand that winding up of these schemes was perhaps the best way to preserve value for unitholders.
- The sale proceeds after discharge of all liabilities and expenses will be paid to the Unit holder(s) in proportion to their respective interests in the assets of Schemes. The liquidation process will be undertaken in line with regulatory guidance.
- This event does not change our stance on other funds managed by Franklin Templeton AMC.
- We continue to maintain our view of fixed-income investors shifting towards Sovereign-grade securities and consider AAA-rated securities per risk appetite. Even with AAA-rated securities, steering clear of stressed segments like NBFCs and HFCs till further revision in view should augur well for investors in the time to come.
- We have been continuously identifying and triggering a rebalancing campaign for investors exposed to credit risk beyond a threshold. Those accepting the rebalancing request would have effectively exited the affected schemes and continue to benefit from our active surveillance.
For those who continued to invest in the affected schemes, there is no reason to panic as the fund house continues to focus on preserving maximum possible value for all unitholders and paying out the same.
(Link to Notice by Franklin Templeton Mutual Fund: https://www.franklintempletonindia.com/downloadsServlet?docid=k8lf815l)