Franklin Templeton winds up 6 credit funds

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 coronavirus 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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