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    Debt fund fiasco starts hurting Franklin Templeton MF; AAUM falls sharply in April-June quarter

    Synopsis

    Apart from debt schemes, Investors also seem to be pulling money out even from the equity schemes managed by the fund house. Equity AAUM also suffers because of market movements.

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    Mutual fund investors seem to be disenchanted with Franklin Templeton Mutual Fund. The fund house that faced investors’ wrath after it shut its six debt mutual fund schemes on April 23, saw its average assets under management or AAUM falling drastically in the April-June quarter. Apart from debt schemes, Investors also seem to be pulling money out even from the equity schemes managed by the fund house. Equity AAUM also suffers because of market movements.

    ETMutualFunds.com wrote in May, a month after the fund house wound up six debt schemes citing unfavourable liquidity conditions in the bond market due to the Covid-19 pandemic, that investors were keeping faith with the fund house even after fiasco as they were pulling out money only from the debt funds and equity funds did not see any large outflows. (Read: Franklin Templeton Mutual Fund sees outflows in debt schemes in April; equity investors stay put). However, it seems, investors have changed their minds.

    The total AAUM managed by the fund house fell by 31.39% in April-June quarter.

    Things You should consider
    • Annualized Return
      for 3 year: 0.02%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 3.7 Years
    Things You should consider
    • Annualized Return
      for 3 year: 1.61%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 1.10 Years
    The fund house refused to comment on the outflows.

    Franklin Templeton Mutual Fund saw its AAUM shrinking in all prominent equity mutual fund categories such as large cap, mid cap, multi cap, small cap, large & mid cap, value fund, in the last quarter. Its marquee names such as Franklin India Bluechip Fund, Franklin Indian Prima Fund, Franklin India Equity Fund, Franklin India Smaller Companies Fund, Franklin India Taxshield Fund, among others, saw large outflows.

    Chokkalingam Palaniappan, Founder of Prakala Wealth Management, Chennai, believes than many investors want to take their money out of Franklin schemes because of fear. “After the winding up of schemes by Franklin, many debt investors took their money out of even the highest rated schemes, like Franklin’s Banking and PSU fund. Recently, a client asked me to shift his money from Franklin Banking & PSU to ABSL Banking & PSU. The reason was trust deficit. It was a big amount and the client didn’t want to risk the money getting locked,” says Chokkalingam Palaniappan.

    He also says that Franklin equity schemes are becoming easy targets because of the market volatility. “Many equity schemes including Franklin schemes are not performing well. At a time when investors want to bet on safer schemes, Franklin’s name has made it easier for equity investors to shun the schemes that are not giving great returns,” says Chokkalingam Palaniappan.

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    8 Comments on this Story

    Kochar Bipin38 days ago
    One invests in mutual funds instead of assets like real estate and FDs for the liquidity they provide.
    Franklin Templeton should immediately list all schemes it would like to close on the exchange to provide the investors liquidity.
    Deep Krishna39 days ago
    Its not surprising at all. The fund manager appears to be a fraudster. I am one of the investors who have lost their money. I will never ever invest in any of their schemes. They just mismanaged, how other fund houses manage liquidity crunch, they also went through the same cycle. SEBI is not willing to take any action, I hope court will definitely put those fraudsters behind bars
    Akshay Tandon39 days ago
    they deserve much worse! played with hard earned money of retail investors!
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