Is Franklin Templeton winding up its business in India? | Frankly Speaking with Sanjay Sapre, President, Franklin Templeton

Recently, Franklin Templeton wound up a suite of six yield-oriented managed credit schemes. WhatsApp and Social Media were flooded with rumours on how this meant the doom of Franklin Templeton. Many messages floated in the market about how investing in mutual funds is a bad idea and one should desist from doing so. Others said that this was a signal of total economic doom in India. So much for a PhD from WhatsApp university. LOL!

This post is an attempt to quell rumours and bring the correct information to readers about the recently wound up Mutual Schemes of Franklin Templeton. 

एको अहं, द्वितीयो नास्ति, न भूतो न भविष्यति = COVID19 Pandemic

(एक मैं ही सर्वत्र हूँ, दूसरा कोई नहीं । न भूतकाल में था, न भविष्य में होगा  – I am the all powerful, there is no other like me – never was, never will be.)

It is true, the Corona Virus Pandemic is an unprecedented one. Of course, the world has seen plague, floods, disease, war and several incidents that led to the crumbling of economies. However, this is the first-ever pandemic that has led to the global collapse of economies & revival of the climate and environment. Just like the environment, the economies also need to heal themselves – fast. What should the middle-class family do in such a scenario?

The term VUCA environment is truer than ever before. The economies are totally Volatile, Uncertain, Complex and Ambiguous. What’s more, the economic playing fields are totally changing and so are the rules of businesses.

Is Franklin Templeton winding up its business in India? Scroll ahead to learn the answer. 

However, the one thing that remains constant it the fact that we, as the middle-class will continue to walk the path of struggles in our lives. We, therefore, need to keep our ears close to the ground & ensure that our monies are saved and safe so that they keep growing.

franklinpodcast

Here is a link of the podcast: The Frankly Speaking Podcast – Sanjay Sapre, President, Franklin Templeton India

I was fortunate to be part of an exclusive session where
Sanjay Sapre, President, Franklin Templeton addressed a group of bloggers on the winding up of 6 Mutual Fund schemes.

The best part of this podcast was that it was a freewheeling chat where we were able to ask questions to Mr Sanjay directly.

Its always better to get the answers from the horse’s mouth – instead of relying on rumours. What do you think?

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Just like the others, I had so many questions for Sanjay and Franklin Templeton.

Which are the 6 schemes of Franklin Templeton that are being wound up?

Why did Franklin Templeton wind up 6 schemes?

What does winding up of the scheme mean for investors?

Does winding up of the schemes means that my money is lost?

What steps did Franklin Templeton take to meet redemptions till 23 April 2020?

Since Franklin Templeton was borrowing to meet redemptions, why didn’t it continue to borrow?

Why did Franklin Templeton anticipate the liquidity stress to continue further?

Is the liquidity problem in the schemes because of redemptions, or because of portfolio quality?

What are the various options considered by Franklin Templeton besides winding up the schemes?

What is the process Franklin Templeton will follow as per regulations to wind up these schemes?

Will Franklin Templeton wait for maturities or will they attempt secondary market sale for the portfolio?

Does Franklin Templeton have a time frame in mind to return the money to the investors?

Will the first instalment of the recovery flow from Franklin Templeton to banks against the borrowings?

What is the impact of borrowing on AUM? Will it reduce the monies being paid to investors?

When and how can existing investors in these schemes expect to receive their money from Franklin Templeton

Once these schemes are suspended by Franklin Templeton, will they continue to accrue gains till they mature?

What are the details of expenses to be charged by Franklin Templeton going forward.

What happens to investors who have SIP/STPs/SWP’s in/from these schemes wound up by Franklin Templeton?

What will happen to the securities held in the segregated portfolio in these schemes that have been wound up by Franklin Templeton?

Will Franklin Templeton prioritize amongst investors while returning the money?

Will Franklin Templeton prioritize amongst schemes while returning the money?

What will be the tax implications for unit holders of Franklin Templeton?

What will happen to investors with dividend option with the 6 wound up schemes at Franklin Templeton?

Should I redeem from all other Franklin Templeton schemes as these could also be wound up?

Is Franklin Templeton winding up its business in India?

This was my question and biggest worry. To this, Sanjay answered:

“Franklin Templeton has been an early and patient investor in India. We have worked to build a long-term business in India over our 25+ year history here. This is also reinforced by the fact that over 33% of our global workforce is based in India. We continue to manage an additional 27 open-ended schemes, 24 close-ended and 6 fund of funds schemes with approximately INR 50,000 Crore of AUM in fixed income, equity, hybrid, overseas, feeder and multi-asset schemes which are not impacted by the winding-up
process. We continue to manage these schemes in line with their investment mandate with a view to delivering superior investment outcomes for our investors.

As affirmed by our global CEO, Jenny Johnson, Franklin Templeton’s commitment to India remains steadfast. We are committed to doing all we can to return monies in the schemes that are wound up at the earliest to investors, and to regain your trust in our brand. This extraordinarily difficult decision to close six of our schemes in a category that we helped create, was taken as it was the only viable option to preserve value for our investors in the current unprecedented environment.”

I really hope that this blog post helps clear misconceptions caused by misinformation.

Do let me know if you have any questions. I will surely reach them to Sanjay Sapre, President, Franklin Templeton and ensure he answers them. 

Penned by:

Mayura Amarkant 

 

 

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