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Franklin Templeton will revise allocation of affected funds to alternate scheme: Report

Exposure to wind-up schemes at marked-down valuations to continue

April 28, 2020 / 01:18 PM IST

Franklin Templeton Mutual Fund's funds of funds, affected by the shutting down of six schemes by the company, will revise their debt allocation to another scheme.

Franklin MF will revise the value of the fixed income schemes in affected fund of funds by 50 percent, said a report by Business Standard.

The new scheme will allow FoFs to hold their impacted scheme exposure at marked down valuations.

These FoFs will continue to operate as normal schemes available for redemptions and subscriptions, but fixed income allocation and redemptions will be via the cash and centralised collateralised borrowing and lending obligations (CBLO) market or other scheme allocations in the portfolios, it added.

Moneycontrol could not independently verify the report.

The process is yet awaiting approval from the Securities and Exchange Board of India (SEBI) and company trustees. Once received, the relevant schemes will be opened for a 30-day exit window.

This is significant as four of the fund house’s life stage FoFs were exposed to the Dynamic Accrual Fund — which was among the six schemes wound down. Besides this, Franklin India Multi-Asset Solution Fund (FIMAS) and Franklin India Dynamic Asset Allocation Fund of Funds are exposed to Franklin India Short Term Income Plan (FISTIP), it said.

Net asset values (NAVs) of the six FoFs and FIMAS dipped between 6 percent and 25 percent due to the revaluing exercise. Investment advisors have called it a “fair move”.

“FoF investors can choose to stay put as the new scheme coming in is unlikely to be a credit risk-oriented scheme, as that strategy is being wound-up by the fund house,” Amol Joshi, founder of Plan Rupee Investment Services said as per the report.

He added recovery in the underlying scheme is “bound to happen from current valuations”.

Moneycontrol News
first published: Apr 28, 2020 01:18 pm