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Claiming its first victims in the mutual fund industry, the ongoing Covid-19 crisis has hit six schemes of Franklin Templeton Mutual Fund. In an unprecedented development for open-ended funds, the fund house has announced voluntary wind-up of six schemes namely - Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund. Effective April 24, 2020, the move comes in the wake of the theatrical fall in liquidity across the bond market caused by the pandemic and the consequential lockdown of the Indian economy.
Citing the evident Covid-19 related market dislocation impacting the Indian credit markets, Franklin Templeton made it clear that the decision to close the six yield-oriented schemes is in the best interest of investors. According to the fund house, winding up of the above mentioned schemes is the only feasible option to preserve value for unitholders.
Consequently, no transactions would now be possible in these schemes and the fund house would dispose-off assets and the realized value will be distributed to all existing unitholders in proportion to their respective claims over the coming months.
| Fund Name | Category | AUM (Rs cr) |
6-month | 1-year | 3-year | |||
| Return (%) | Rank | Return (%) | Rank | Return (%) | Rank | |||
| Franklin India Credit Risk | DT-CR | 4434 | -5.49 | 17/20 | -3.78 | 15/20 | 3.68 | 11/18 |
| Franklin India Dynamic Accrual | DT-DB | 3119 | -2.38 | 29/29 | 0.55 | 27/29 | 5.51 | 19/25 |
| Franklin India Income Opportunities | DT-MD | 2506 | -2.12 | 15/17 | 0.51 | 13/17 | 5.13 | 10/15 |
| Franklin India Low Duration | DT-LD | 2737 | -7.68 | 25/26 | -4.82 | 21/26 | 3.72 | 18/26 |
| Franklin India Short Term Income Plan | DT-SD | 7093 | -5.26 | 29/29 | -3.28 | 26/29 | 4.24 | 17/26 |
| Franklin India Ultra Short Bond | DT-USD | 10964 | 0.06 | 26/27 | 4.64 | 21/24 | 7.29 | 5/17 |
| AUM as of 31 March 2020 Return and rank as of 23 April 2020 for Regular plans |
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While this definitely is a hard blow to the debt fund industry, these six funds were already saddled with difficulties in terms of debt defaults and subsequent segregations. In the recent months, all of these funds had written down their respective exposure to troubled bonds of Vodafone Idea Ltd. and a few of these also wrote down their exposures to Yes Bank Ltd.
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