One month into the lockdown, with major economic activities on a standstill, US-based Franklin Templeton today announced an unprecedented step to lock in investor money as the coronavirus pandemic worsens credit market strains. The Global Finacial firm has decided to shut down six fixed-income and credit-risk funds run by its Indian unit, locking in Rs 30,800 crore ($4.1 billion) of investor money. The winding-up of these credit funds effective from April 23.
In a statement, Franklin Templeton declared, “In light of the severe market dislocation and ill-liquidity 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.” The 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, Franklin India Income Opportunities Fund.
The schemes have been wound down and will not allow any further transactions. Investors cannot redeem the funds as of now. This includes purchases or redemptions through Systematic Investment Plans /Systematic Transfer Plans/Systematic Withdrawal Plans. In other words, there will be no purchases or redemptions.
Fund managers across the country speculate significant implications on the country’s mutual funds industry. Already reeling from the collapse of major infrastructure financier IL&FS in 2018, the credit markets have now been hit by the strict lockdown meant to curb the deadly coronavirus outbreak.