Breaking News: Franklin Templeton winds up six of its fixed-income debt schemes amid covid-19

Franklin Templeton Mutual Fund has voluntarily decided to wind up six of its fixed-income debt schemes effective April 23.

The news came in this morning after the fund house took  the drastic  step as  they believes that the market will not return to normalcy soon because of coronavirus disruption.

According to statement released on their social media states ” The covid-19 pandemic and the related lockdown has resulted in significantly reduced liquidity in the Indian bond markets for most debt securities and hasalso led to unprecedented levels of redemptions.

After considering all the options, the trustees where left with no other option but to wind up the schemes.”

The six schemes, namely, 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 cumulatively manage assets worth ₹26,000 crore.

As investors look for safer assets, bank deposits — despite the lower returns they offer — may see more preference since safety will be sought-after over returns. Some mutual funds will face high redemption pressure in the short-term, experts said.“The event will shake the trust of the investor and there is redemption likely. This money could go to banks till the time banks there is clarity,” said Siddharth Purohit, analyst at SMC Securities.

Templeton announced closure of six funds — Franklin India Low Duration Fund (FILDF), 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 (FIIOF) effective April 23. Total assets under management of these funds are estimated around Rs 25,000 crore.