Everything you need to know about whats happening with the 6 debt schemes of Franklin Templeton

Personal finance
4

Hi can someone clarify below questions:-

  1. what will be the probable maturity period of franklin low duration fund?
  2. as mentioned in the notification that NAV of the schemes will be displayed regularly. So if the fund is wind up then, will there be no downgrading of NAV, which will eventually bring the investment value further lower??
  3. what will happen if the companies in which franklin have invested the money, get defaulted??
    Is there any sort of guarantee that we will receive our money back???
5

@Bhuvan Thank you for a very good explanation…
Approximately how much time they will take to return complete investment to investors especially in Ultra Short Bond fund?

6

Hi Bhuvanesh,

After this Franklin incident, is the money parked in debt funds like liquid bees safe? Can such a situation happen with liquid bees too?

7

The average maturity of the fund is 1.46 years
https://www.valueresearchonline.com/funds/11396/franklin-india-low-duration-fund?utm_source=direct-click&utm_medium=funds&utm_term=&utm_content=Franklin+Low+Duration+Reg&utm_campaign=vro-search#fund-portfolio

No, there hasn’t bee any downgrade or defaults in any of the bonds. Because of the continuing redemptions pressure, Franklin has been unable to sell bonds to pay the redemption proceeds. This is why they had borrowed money and finally decided to wind down the schemes.

Unfortunately, nothing in the markets have a guarantee. As of today none of the holdings have defaulted.

8

Franklin will try to sell the holdings if the market sentiment improves or hold the bonds till maturity. You can check the holdings of the fund to get an idea of when they mature.

9

Answered a similar question here

Liquid bees are relatively safe because they only invest in overnight securities.

10

Liquid Bees is an ETF. So, are liquid ETF’s more safe than liquid mutual funds. Thanks.

11

My understanding is that they had to lockdown their schemes because they had lots of redemption pressure and ONLY way to honour redemptions was to sell good quality bonds as they are the ones with liquidity, resulting in decreasing exposure to good bonds/etc and eventually increasing exposure to bad bonds.
My question is why couldn’t have they used the concept of side-pocketing earlier in the picture? Or side-pocketing is only allowed for “junk” bonds?

12

On what basis investors money will be return back,Will it on the nav which was on the day of shutting these funds or on the day of selling those assets.

13

I believe side pocketing is only done if the underlying security unable to pay interest on time or the issuer files bankruptcy…

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14

You can check the holding of Franklin funds here:

15

Side pocketing happens only when there are defaults or downgraded. In this case, it’s an liquidity issue.

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16

What are chances of banknifty gap down on Monday, because of this news?

17

Assuming that Franklin sells some assets, the proceeds will be distributed proportionally. If not the NAV will reflect the regular accruals just like normal.

18

Toss a coin and you’ll find the chances.

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19

If I had that kind of coin, I wouldn’t have asked that question! :joy:

20

Hey Bhuvanesh,
Thanks for the clarifications.

21

Hello, is there a way to track Mutual Funds movement in real time ? with a stock ticker app ?

22

The basic fundamental rule of MF is to invest for the long term. This is one of the reasons why NAV’s are published once a day. Real-time NAV update makes no sense for MF. But yeah, not sure if there is any such facility.

23

Thanks friend :smiling_face_with_three_hearts:, I appreciate your knowledgeable replies. At the moment I use this > https://www.moneycontrol.com/mutual-funds/nav/franklin-india-equity-fund/MKP003 , to track it , In your opinion is this a good source to track its NAV ?

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