Franklin Templeton MF suspends six more schemes
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Franklin Templeton MF, the troubled fund house that was forced to close six of its debt funds due to extreme liquidity in the market, has marked down six fund of funds (FoFs) managed by it with total assets of about Rs 933 crore. Since these FoFs had investments in two of the six funds which were closed on Friday, it was difficult for these FoFs to generate any income in the current situation and hence have been re-valued. Due to the markdown of these FoFs, the NAVs of these schemes fell by as much as 22.4%.
A fund of fund is a mutual fund scheme that invests in one or more mutual fund schemes, from the same fund house, from another fund house or both. Franklin Templeton MF was running seven domestic FoFs and two international FoFs. All the remaining schemes of the fund house, including all its equity funds will continue as usual.
Franklin Templeton MF’s multi-asset solution and dynamic asset allocation FoFs had invested in short term income fund, one of the six suspended earlier. The fund house’s four Life Stage FoFs had invested in Dynamic Accrual Fund, which was also suspended on Friday.
A spokesperson for Franklin Templeton MF confirmed the development. “Pursuant to the decision to wind up Franklin India’s short term income plan and dynamic accrual fund, the investments by the (six) fund of fund schemes in the two underlying schemes that are wound up were illiquid effective April 24, 2020. Hence, considering the immediate illiquidity of the investment, these funds were fair valued. We are re-working the underlying asset allocation of the fund of fund schemes and will intimate the changes to investors shortly,” the spokesperson said.
is the first time such an incident has happened in India. On Friday, while announcing the closure of the six debt schemes, the fund house said that due to the Coronavirus pandemic volatility in the financial market, as inflows into these schemes dried substantially, outflows jumped as investors who needed money in an uncertain market condition redeemed. Unable to meet the heightened redemptions even after borrowing from banks, the fund house finally decided to wound down the schemes.
On Friday, to office bearers at AMFI, the fund industry traded body, assured investors that there was no reason to panic and Franklin Templeton’s closure of six schemes was ‘an isolated incident’. However, fund industry said that despite the endeavor by all the fund houses to mitigate investors’ concerns, between Rs 2,000 crore and Rs 2,500 crore was withdrawn from the industry. #casansaar (Source - TNN, Times of India)
A fund of fund is a mutual fund scheme that invests in one or more mutual fund schemes, from the same fund house, from another fund house or both. Franklin Templeton MF was running seven domestic FoFs and two international FoFs. All the remaining schemes of the fund house, including all its equity funds will continue as usual.
Franklin Templeton MF’s multi-asset solution and dynamic asset allocation FoFs had invested in short term income fund, one of the six suspended earlier. The fund house’s four Life Stage FoFs had invested in Dynamic Accrual Fund, which was also suspended on Friday.
A spokesperson for Franklin Templeton MF confirmed the development. “Pursuant to the decision to wind up Franklin India’s short term income plan and dynamic accrual fund, the investments by the (six) fund of fund schemes in the two underlying schemes that are wound up were illiquid effective April 24, 2020. Hence, considering the immediate illiquidity of the investment, these funds were fair valued. We are re-working the underlying asset allocation of the fund of fund schemes and will intimate the changes to investors shortly,” the spokesperson said.
is the first time such an incident has happened in India. On Friday, while announcing the closure of the six debt schemes, the fund house said that due to the Coronavirus pandemic volatility in the financial market, as inflows into these schemes dried substantially, outflows jumped as investors who needed money in an uncertain market condition redeemed. Unable to meet the heightened redemptions even after borrowing from banks, the fund house finally decided to wound down the schemes.
On Friday, to office bearers at AMFI, the fund industry traded body, assured investors that there was no reason to panic and Franklin Templeton’s closure of six schemes was ‘an isolated incident’. However, fund industry said that despite the endeavor by all the fund houses to mitigate investors’ concerns, between Rs 2,000 crore and Rs 2,500 crore was withdrawn from the industry. #casansaar (Source - TNN, Times of India)
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