In a big blow to the debt fund investors, Franklin Templeton Mutual Fund on Thursday announced the closure of six of its credit funds due to liquidity issues amid coronavirus lockdown.
The impact of the coronavirus pandemic has wreaked havoc in the Indian bond market and has been the reason the fund house to shut six of its debt funds. The total assets under management are of about Rs 25,000 crore, according to reports.
The following are the six fund schemes that have been rolled back:
Franklin India Low Duration Fund (FILDF)
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 (FIIOF)
Since the fund house has wound up the selected schemes, the existing investors can no longer redeem their money, make any fresh purchases, make transfers to any equity schemes or make systematic withdrawals.
"There has been a dramatic and sustained fall in liquidity in certain segments of the corporate bonds market on account of the Covid-19 crisis and the resultant lock-down of the Indian economy which was necessary to address the same," it said.
The fund house further said that mutual funds, especially in the fixed income segment, are facing continuous and heightened redemptions. It said that individual emails are being dispatched to the unit holders regarding the closure of the schemes.
The trustee or the people authorised by it will continue to realise or dispose-off the assets of the schemes in the best interest of the unit holders. The sale proceeds after discharge of all liabilities and expenses will be paid to the unit holders in proportion to their respective interests in the assets of schemes.