Franklin Templeton Mutual Fund close debt schemes

Franklin Templeton Mutual Fund close 6 debt schemes

On April 23, 2020, Franklin Templeton Mutual Fund has voluntarily decided to close six fixed-income debt schemes. The fund house has taken this step as it believes that the market will not return to normalcy soon because of the Coronavirus disruption.

Franklin Templeton Mutual Fund six schemes, namely,

1. Franklin India Low Duration Fund

2. Franklin India Dynamic Accrual Fund

3. Franklin India Credit Risk Fund

4. Franklin India Short Term Income Plan

5. Franklin India Ultra Short Bond Fund

6. Franklin India Income Opportunities Fund

All the six schemes cumulatively manage assets worth ₹26,000 crore.

Many retail, HNI, and corporate investors park money in debt funds due to higher returns as compared to bank deposits, easy liquidity, and tax benefits of indexation if they remain invested for three years. With the fund house deciding to wind up these schemes, these open-ended schemes, which are available for buying or selling on a daily basis on every working day, will not be now available.

Starting April 24 existing investors in the scheme will not be able to withdraw their investments, make fresh purchases, do transfers to equity schemes, or make systematic withdrawals to meet their monthly expenses.

The current lockdown on account of the COVID-19 pandemic has led to risk aversion amongst investors and there are no takers for lower-rated and unrated paper. Yields of lower-rated paper are high in the market and there is no price discovery, forcing the fund house to take this decision.