Can you do anything about your debt mutual fund investments in Franklin Templeton MF?

The 6 Franklin funds which were shut down by the AMC, will continue to publish their net asset values daily, and investors will not be charged any investment management fee on these funds.

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Debt mutual fund investors were in for a rude shock this morning. They woke up to read the news that Franklin Templeton Mutual Fund has decided to wind up their six debt mutual fund schemes. That means, investors cannot redeem or subscribe to these schemes anymore till further notice.

These funds will continue to publish their net asset values daily, and investors will not be charged any investment management fee on these funds. Units of the funds will no longer be available for purchases and redemptions, post cut-off time on April 23, 2020. This includes purchases or redemptions through Systematic Investment Plans / Systematic Transfer Plans / Systematic Withdrawal Plans, said the fund house.

  • %Annualized Return for
  • Suggested Investment Horizon
  • N.ATime taken to double money
  • 1.97%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 9.5 YearsTime taken to double money
Many debt mutual fund investors are asking their advisors whether they have any way out the mess? spoke to two advisors for their view.

Vishal Dhawan, Founder, Plan Ahead Wealth Advisors, a wealth management firm, based in Mumbai:

The impact of the disruption is specific to lower rated/higher credit risk securities which have become illiquid at this point. There is nothing that the investors of these schemes can do at this point than to wait.

Investors need to be aware that most debt mutual fund schemes do not invest in lower rated / high credit risk debt securities and are thus not likely to be impacted. Therefore, investors need to look at their debt schemes carefully rather than take any knee-jerk reactions.

Chokkalingam Palaniappan, Director, Prakala Wealth Management, based in Chennai:
We have always asked debt mutual fund investors that they need to have a higher risk appetite to invest in credit schemes. These are unprecedented times. I hope investors have diversified their debt portfolios to minimize risk.

In a way this is a step in the right direction. Investors will ultimately get their money back - the only issue is the time lag. Going forward it is better to stick with high quality liquid and ultra short funds.

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