Franklin Templeton’s first fund launch after 2 years since debt fund crisis to open on August 16.

Franklin Templeton India AMC is set to launch a balanced advantage fund. The category is the hottest in the mutual funds space with 6 launches in the past 3 years.

In November 2020, capital markets regulator Sebi had issued a show cause notice to the company following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of AUM from 3 lakh investors, citing liquidity challenges because of the pandemic.

MUMBAI, 26 JULY, 2022 (GPN): Asset manager Franklin Templeton said today at a media conference held at St.Regis Hotel in Mumbai, that it is not leaving the country and will be rebuilding the crisis-hit brand here.

Franklin Templeton Mutual Fund (FT MF) will be launching a balanced advantage fund – its first mutual fund scheme in around two-and-a-half years since it decided to wind up six of its debt schemes in April 2020.

FIBAF is a dynamically-managed fund. Like other blanched advantage funds or BAFs, the equity exposure will be maintained between 65% and 100%. At any point, if the equity allocation falls below 65%, the gross equity exposure will be maintained using equity derivatives. Debt instruments will make up for the rest.

The NFO will open for subscription on August 16 and will close on August 30.

The Balanced Advantage Fund is the largest hybrid category in the MF industry, accounting for investor assets worth Rs 1.7 trillion. To be sure, there are 25 schemes already in the category.

Typically, a BAF shifts exposures between equity and debt, depending upon the valuations of the stock markets. When equities are over-valued, the fund reduces equity exposure, while at the same time increasing debt exposure. It does the opposite, when equities are under-valued.

FT MF went through a difficult period after it shut its six debt schemes due to lack of liquidity in debt markets. Some investors initiated legal process against the fund house. While the schemes have now largely returned the funds to the investors, the legal proceedings have not yet concluded.

The legal battle over whether Franklin Templeton crossed the line and took undue risks is still on. After the capital markets regulator, Securities and Exchange Board of India (SEBI), slapped hefty fines on the fund house and its senior officials and asked it to return the fund management fees it had earned in the months leading to the winding up, Franklin Templeton filed an appeal at the Securities Appellate Tribunal (SAT).

FT MF’s former President Sanjay Sapre had pointed out that Franklin Templeton India had taken a conscious decision to not launch any debt funds till its court cases are resolved. On the equity side, he had added, the fund house is present in almost all the important categories, except the new-age index and exchange-traded funds. One important category that the fund house wasn’t present in, was a balanced advantage fund.

Avinash (Avi) Satwalekar, President, Franklin Templeton – India who took charge as the head of Franklin’s operations here three months ago, said it will rebuild the brand, acknowledging that it has taken a beating over the last two years following the regulatory action.That void will get filled up on August 16.

Avinash Satwalekar, President, Franklin Templeton–India, said, “ This new fund is for investors looking for a balanced exposure to equity and debt over the longer term while also capitalizing on opportunities provided by the market from time to time. Apart from the benefits of diversification, this formula-driven approach with its in-built ‘buy-sell’ discipline helps to negate the behavioural biases caused due to emotions of greed and fear.”

“I can say categorically that we are not leaving India. It would be silly to leave India,” added Avinash Satwalekar.

Avinash Satwalekar acknowledged the speculation about the company following the footsteps of its other foreign peers in exiting India, especially after the Sebi action in the debt schemes, but made it clear that it has no such plan.

He said the company, which has a 26-year presence in the country, has over Rs 56,000 crore of assets under management (AUM) from 20 lakh investors and its operations are incredibly profitable.

In November 2020, capital markets regulator Sebi had issued a show cause notice to the company following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of AUM from 3 lakh investors, citing liquidity challenges because of the pandemic.

Eventually, the company was asked to pay Rs 5 crore as a penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and was banned from launching new debt schemes for alleged irregularities in running six of its debt schemes.

It has challenged the Sebi order in the Securities Appellate Tribunal, which is yet to adjudicate on the matter.

The company will be re-engaging with distributors. Employees, investors and also investing in people, physical presence in the country to capture new growth pockets and also be launching new products.

Meanwhile, in its first fund launch in a decade, it announced the launch of a balanced advantage fund which will also be investing in fixed income opportunities.

Satwalekar said it will be regularly launching products over the next 6-12 months.-Ends.

For all previous Stories about Franklin Templeton Read : HERE