If you are the one who spends a minute or two in the business and finance section of your newspaper, I’m sure you would be aware of the Franklin Templeton Mutual Funds Debt Schemes wind up the issue. You can either read this blog post to understand more about Franklin Templeton Mutual Fund. In that blog post, I also spoke about the various myths associated with the Franklin Templeton Mutual Funds issue.
Over the last few months, there was a cloud of uncertainties around the funds and how would the investor receive their hard-earned money. Even during these tough times, the mutual fund had received close to 12,000 crores from pre-payments, maturities, and coupons – Reference.
What’s next for Franklin Templeton investors
There are 6 Franklin Templeton mutual fund schemes that were wound up are:
- Franklin India Low Duration Fund
- Franklin India Dynamic Accrual Fund
- Franklin India Credit Risk Fund
- Franklin India Short Term Income Plan
- Franklin India Ultra Short Bond Fund
- Franklin India Income Opportunities Fund.
As per the Franklin Templeton E-voting conducted earlier, they had asked the investors to vote for the liquidation of the funds. However, there were a few roadblocks in the process. And that is hitting the customers hard since they still don’t have money in their hands.
Franklin Templeton E-Voting – Yes or No?
While the funds had received cash in some form or the other, FT was asked by the Karnataka High Court to take consent from the investors on the liquidation aspect. The matter was even heard in the Hon’ble Supreme Court and the court has allowed Franklin Templeton to conduct e-voting, but with the following conditions:
- SEBI will appoint an observer who will oversee the entire e-voting process
- The Franklin Templeton Mutual Fund e-voting will be carried out by KFinTech. So if you are already an investor in the stock market, you might already have the account else you might have to create one. Please note that there is no way to vote in person or by post.
- Lastly, the results of the e-voting will be shared with the Supreme court without any intervention from Franklin Templeton in a sealed envelope along with the observer’s report
- Redemption will stay until the result of e-voting is the announcement
The e-voting process starts on 26th December and will go on to 28th December. Also, there will be a virtual meeting held with the unitholders on 29th December.
What does your vote mean? If you vote Yes, it will allow Franklin Templeton to start the purchase & redemption process. If you vote no, the redemption process cannot start. Since I’m not a financial expert, I can’t say much except that voting a yes would lead to a faster payout in an orderly manner. But I also understand that the distribution of cash to unitholders would be done on a pro-rata basis.
You can find more details about the process via their official communication channel here.
What’s next for Franklin Templeton?
Franklin had started their journey in India as an AMC a few decades ago. They manage a large portfolio as part of various mutual fund schemes. While these 6 had to be wound up, their other mutual fund schemes are up and running. The Franklin Templeton E-voting process is done to have the assets liquidated so that the investors can get their money back.
However, with the crores of rupees stuck in those locked funds, a retail investor would want to stay away from Franklin Templeton. The company is doing the best it can to return the money to the investors of the blocked funds to regain the lost trust.
Do remember that other Franklin Templeton mutual fund schemes in equity markets are unaffected by this turmoil and investors can invest based on their advisor’s inputs.
The Mutual Fund Sahi Hai campaign has got a lot of retail investors on board and we did see a rise in inflows over the past year. However, it is always, always advised to consult your financial advisor before making any investment.
Were your questions answered about Franklin Templeton’s debt Mutual Funds schemes? What do you think can be done to avoid such issues in the future? Mention in the comments below or tweet to me at @Atulmaharaj or DM me on Instagram.
** These are my personal views on the scenario. Request you to reach out to your financial advisor to understand more and identify the right financing opportunities. And like always, Mutual Fund investments are subject to market risks, please read the scheme related documents carefully before investing. Further, my heart goes out to the investors who have been hurt by this fiasco. The financial institutions in India need to strengthen and better governance should be in place.