Amfi seeks to quell panic after Templeton shut 6 debt schemes

Mutual fund industry lobby Amfi on Friday assured investors that majority of the fixed income fund assets is invested in superior credit quality securities, and the schemes have appropriate liquidity to ensure normal operations.The statement came after Franklin Templeton Mutual Fund deciding to voluntarily close six debt schemes, citing lack of liquidity in the debt market.Assets under management (AUM) of these schemes constituted less than 1.4 per cent of the Indian mutual fund industry’s aggregate AUM as on March 31, 2020.“Covid-19 has led to a significant reduction in liquidity in debt markets and higher redemptions. The decision to wind up is the best possible strategy for existing investors.” Franklin Templeton said in its conference call on Friday.The Association of Mutual Funds in India said investors should continue to focus on their investment goals, consult their financial advisers and not get sidetracked by an isolated event in a few schemes of one company.“Banking liquidity in excess of Rs 7,00,000 crore, long-term repo operations ( LTRO ) conducted by RBI , expectations of further rate cuts and Operation Twist by RBI are likely to keep bond market liquid and normally functioning in these challenging times,” said Nilesh Shah, Chairman, Amfi.“The industry remains fully committed to investor interests and there is no need for them to panic and redeem investments. The industry continues to remain robust like during the 2008 sub-prime crisis or the 2013 Taper Tantrum crisis.” Shah said.Amfi Chief Executive NS Venkatesh said the mutual fund industry has seen many cycles and its professional fixed income fund managers have managed crises efficiently over the years.Investors continue to repose trust in the industry and the industry managed to double AUM in just five years, from Rs 11.88 lakh crore as on March 31, 2015 to Rs 24.70 lakh crore of AAUM as on March 31, 2020, he said.

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