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    Franklin Templeton MF's shut schemes receive Rs 3,275 cr since closure

    Synopsis

    Franklin Templeton Mutual Fund on Monday said its six shut schemes have received Rs 3,275 crore from maturities, pre-payments and coupon payments since closing down in April.

    Agencies
    Franklin Templeton Mutual Fund on Monday said its six shut schemes have received Rs 3,275 crore from maturities, pre-payments and coupon payments since closing down in April. The six schemes were: Franklin India Ultra Short Bond Fund, Franklin India Low Duration, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.

    "From June 16, 2020 to June 30, 2020, the schemes have received an additional Rs 1,311 crore from maturities, pre-payments and coupon payments. This takes the total amount received since April 24, 2020 to Rs 3,275 crore," the fund house president Sanjay Sapre said in a letter to investors.

    He further said that the amount has been received without the ability to efficiently monetise assets and the schemes will endeavour to accelerate monetisation post the successful completion of the e-voting exercise and the unitholder meets.

    Franklin Templeton shut six debt mutual fund schemes on April 23, citing redemption pressure and lack of liquidity in the bond market.

    With regard to concerns over decline in net asset value (NAV) of some of the funds, Sapre said this is the result of a maturity date reset for the securities of Edelweiss Rural & Corporate Services Limited (ERCSL).

    "The impact on the NAV is due to valuation provided by the valuation agencies due to reset of maturity date to the next rate reset date (June 30, 2022)," he said.

    Independent valuation agencies typically value these interest rate reset securities considering the next interest rate reset date as the maturity date, Sapre said, adding that Franklin Templeton is continuously monitoring the developments in this regard and engaging with the issuer for early repayments.

    He also said that winding-up of a scheme does not mean there has been any kind of write-off of investments made by the schemes.

    Last week, the mutual fund house said it received a total of Rs 1,252.44 crore from Vodafone Idea which will be distributed to unitholders of the segregated portfolio.

    5 Comments on this Story

    Sriramulu Yelisetty24 days ago
    FT management is devious and not fair. If they distribute to investors why court will object? FT is looking for some excuses. They can even request permission from SEBI or court for distributing received amounts.
    Pradeep Sheth24 days ago
    The next day after Franklin debt funds wind up, another fund house's medium term plan NAV was marked down by about 5% citing regulatory provision of rating downgrade of a paper downgraded over 1.5 yrs ago !!!! Apparently, this was misuse of regulatory provision to reduce outflow of fund AUM ,should there be a redemption run. Why was the mark down not done over 1.5 yrs ago when the paper downgrade actually happened? There needs to be more accountability and less fund house discretionary behaviour.
    Dhananjay Sinha25 days ago
    Why can't SEBI direct Franklin to pay up investors as the decision to discontinue the six debt funds was entirely theirs? Redemption funds may be obtained either from the funds available from the other ongoing schemes to be replenished after debtors of the six debt funds finally clear their dues or sell assets as may deem fit. Franklin's should have made arrangements for redemption once they decided to discontinue the debt funds. How long should the investors wait to be finally paid.
    Dhananjay Sinha
    The Economic Times