Covid-19 crisis: Franklin Templeton voluntarily winds up six credit funds
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Mumbai: Franklin Templeton Mutual Fund said on Thursday it has voluntarily decided to wind up its suite of six yield-oriented, managed credit funds, effective April 23, citing the severe market dislocation and illiquidity caused by the Covid-19 pandemic.
These six funds are: Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund.
“In light of the severe market dislocation and illiquidity caused by the Covid-19 pandemic, this decision has been taken in order to protect value for investors via a managed sale of the portfolio,” Franklin Templeton said in a late evening release.
The fund house said this action is limited to the mentioned funds, which have material direct exposure to the higher yielding, lower-rated credit securities in India that have been most impacted by the ongoing liquidity crisis in the market.
It clarified that all other funds managed by Franklin Templeton Mutual Fund in India – equity, debt and hybrid – are unaffected by this decision.
“The decision to wind up these funds was an extremely difficult one, but we believe, it is necessary to protect value for our investors and presented the only viable means to secure an orderly realization of portfolio assets,” said Sanjay Sapre, President, Franklin Templeton – India.
“Significantly reduced liquidity in the Indian bond markets for most debt securities and unprecedented levels of redemptions following the Covid-19 outbreak and lockdown has compelled us to take this decision,” he added.
“While these funds are getting wound up, accruals into these funds should continue in the same way as now, as the underlying securities held by these funds remain sound,” Santosh Kamath, CIO, Franklin Templeton Fixed Income India, said.
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First – Franklin Templeton today announced the winding down of SIX of its Debt Funds (which had credit risk)
This is effective tomorrow i.e. 24th April 2020
This is an unprecedented move
(1/n)
These Funds are
Franklin Low Duration
Franklin Dynamic Accrual
Franklin Credit Risk Fund
Franklin Short Term Income
Franklin Ultra Short Bond
Franklin Income Opps Fund
All these funds have been wind down with immediate effect
(2/n)
Ans: This wind-down is similar to a lock-down
These schemes will not allow any further transactions, no purchases, no redemptions
It’s like the entire scheme becomes a segregated portfolio
(3/n)
These six schemes put together as of date have an AUM of Rs. 28,000 cr. This entire AUM is now stuck as it is. You cannot redeem
What do u mean, I cannot redeem?
Simply put, you cannot withdraw any monies
(4/n)
Ans: It’s not a joke. Here;s the formal notice from Franklin Templeton
Ans: Yes, the schemes are wound down. They will never open again
It will work like a segregated portfolio i.e. the day they get any interest,, maturity from any of the holdings it will distributed to all
(6/n)
Ans: As and when the underlying portfolio instruments mature or the scheme receives the money back (in case interest or defaults etc) they will pay it back to you.
So that’s that simply put. Any specific Qs will be happy to answer
(7/n)
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I never received any whatsapp forwards. Can you let me know some whatsapp groups where such foresight / predictions are circulated?
Unfortunately I moved all my FD to FT debt fund few months back. Looks like I will die poor and in pain 
That is why it is necessary to understand the product you are buying.
They had -17% cash position some time back (someone on twitter pointed out). This was supposed to happen.
Ripple effect can be dangerous. They are the biggest buyers of nbfc’s debt. Situation just seems to get worsen.
Mutual fund shahid hai
Thanks to @marketdimer i redeemed my UST fund fully (dec-Jan).
Link to thread please do that i don’t make serious mistakes in future?
People don’t even understand the difference between debt funds & liquid funds investing in treasury papers & still decide to invest in these debt funds because of a bit higher return. That is why I never recommend anybody a debt fund until I make that person understand the difference between a debt fund & a liquid fund invested in treasury papers. Also once the person understand they rarely choose debt fund or even liquid MF over regular savings acc/fd.
@Awake @BubbleBoyChickenLittle @bikidas2060
People like complicated things. 
Now I gradually am understanding why people asked me not to invest in MF and said stock market when invested carefully is far better than MF 
It is not like that, MF are still far better than direct investment in shares. Anyone who say direct investment in shares is better is either an expert already earning in 5 figures from his share investment or a novice yet to lose 5/6 figures amount in share investment, no in between.
Vodafone 10th July 2020 CP Maturity Update Happy to update that we have received full dues from Vodafone towards the maturity today. Total amount 1253 cr received with interest.
Regards, Franklin Templeton
Verify at ur end.
There is a tweet by Bloomberg Quint as well in this regard :
https://twitter.com/BloombergQuint/status/12815...
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This is extremely sad and this will create ripple across all debt funds and MF might even cause crisis. I received heaps of fwds warning to redeem all funds