Franklin India Corporate Debt Fund reaches Rs 1,000 crore AUM in 28 years, offers nearly 9% CAGR since inception

Franklin India Corporate Debt Fund, a flagship income-oriented scheme by Franklin Templeton Mutual Fund, has completed 28 years in the market alongside a key milestone of Rs 1,000 crore in assets under management (AUM) and has offered a compounded annualised return of 8.56% since inception in 1997, as of July 31, 2025.

Franklin India Corporate Debt Fund is one of the private sector mutual fund industry’s longest running fixed income schemes, according to a press release by the fund house.

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"The Franklin India Corporate Debt Fund exemplifies our investment philosophy and the tangible impact of our brand promise—helping savers ‘Reach for Better’ through disciplined, risk-aware fixed income management," said Rahul Goswami, CIO – Fixed Income, Franklin Templeton Asset Management (India) commented on the milestone.

The fund’s strategy—grounded in investing in predominantly AAA-rated and high-quality corporate debt—is suitable for conservative investors with a 1–3-year investment, the release said.

The scheme, managed by Anuj Tagra, Chandni Gupta and Rahul Goswami. It maintains a diversified portfolio with 52% allocation to corporate bonds, 32% to public sector bonds, and 8% in government securities as of July 31, 2025.

With a Macaulay duration of about 2.6 years, the fund is positioned conservatively to manage interest rate risk. Corporate bonds normally earn a higher return than government securities of the same tenure. This allows investors in the scheme to benefit from this additional margin of high safety and highest safety rated corporate bonds.

“We have prioritised safety by investing more than 4/5ths of the portfolio in high rated instruments while taking advantage of the high carry in the short to medium segment of high-quality debt instruments,” added Anuj Tagra, Vice President - Portfolio Manager, Fixed Income, Franklin Templeton Asset Management (India).

These high rated bonds not only carry the minimal risk of not being paid on time and in full but are also the ones which are most traded and liquid, the release said.

The fund managers believe that with a revival of rural and urban demand, higher than the long-term average capacity utilization of India Inc we may see private capital expenditure rising appreciably which would in turn fuel more issuance of corporate bonds, to part fund the expansion requirements.

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In the present scenario, Franklin India Corporate Debt Fund aims to maintain a high exposure towards short and medium maturity instruments to benefit from surplus liquidity conditions. At the same time, the fund managers see tactical opportunity at the longer end of the curve, particularly in the 30-Year segment - where yields have risen and the elevated spread is likely reverting to mean going forward. This flexible approach allows the fund to pick investment opportunities on the yield curve without adding absolute duration risk to the portfolio.

With a minimum SIP investment of Rs 500 the scheme appeals to both retail and institutional investors seeking stable, long-term income generation.