This Thursday Franklin Templeton India announced that it has shut down its six fixed income debts schemes. According to the experts the situation created by COVID-19 has made the future of debt funds uncertain. Some experts are comparing the Franklin Templeton crisis with the IL&FS crisis. So how serious is the problem and should you withdraw your money from all other debt funds? In this article, we will read about Franklin Templeton closed funds, is Templeton shutting down and is it safe to invest in the mutual funds.
Franklin Templeton closed funds
Franklin Templeton India has shut down these six mutual fund debt schemes.
- Ultra Short Bond Fund
- Short Term Income Fund
- Credit Risk Fund
- Low Duration Fund
- Dynamic Accrual Fund
- Income Opportunities Fund
Investors will not be able to withdraw or transfer their existing investments or start any SIP in these schemes, or make fresh investments in them. The closure of these six mutual funds leads to the Franklin Templeton crisis.
What lead Franklin Templeton India to the mutual funds closure?
The extreme drop in liquidity in the bond markets, coinciding with very large redemptions following the COVID-19 outbreak compelled the fund house to make this decision.
The company further said
“This decision may protect value for investors. It is the only viable means to secure an orderly realization of portfolio assets”
Is Franklin Templeton shutting down?
Templeton has only shut down six of its debt scheme that has a combined size of Rs.442 crores. Even after the shut down of these six debt schemes Templeton has seven debt funds. It has a combined assets of Rs.17,800 crores as on April 22, 2020.
Apart from these Templeton 15 equity funds worth Rs.36,663 crore and 11 hybrid category schemes with assets of Rs 3,143 crore. These funds will continue to function as usual.
So this does not mean that it is shutting down.
Is it safe to invest in mutual funds now?
Most experts believe that investors are likely to get nervous and redeem their debt mutual funds in a hurry. It will rather put extra pressure on the debt market. Experts are skeptical about the current state of the economy. There are dozens of debt funds in the country, which have invested in their debt instruments based on the influence of companies. According to experts, the situation is still worrying for investors investing in all these funds.