After citing severe market dislocation in India due to novel coronavirus pandemic, US-based mutual fund Franklin Templeton has decided to wind up six managed credit fund houses from the country. The fund released a statement on Thursday, April 23, stating that the measures are being taken to protect investors’ sale portfolio as lower-rated credit securities will be severely affected by the liquidity crisis in the Indian market.
Fund houses that have been closed include Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, Franklin India Low Duration Fund, Franklin India Income Opportunities Fund, and Franklin India Dynamic Accrual Fund.
Investors won’t be able to make a new purchase as their money will remain locked until maturity. The decision comes into effect from April 23 to protect the value for investors and manage the sale of the portfolio, which is around Rs 30,800 crore.
The asset manager told reporters that it’s the only appropriate way to preserve the value for investors as certain corporate bonds will suffer a fall in liquidity due to the COVID-19 crisis.
The managers said it’s a serious concern as the debt market has frozen will definitely affect the economy. They further the Reserve Bank of India and the Government should take necessary measures towards not letting markets collapse, as the securities these fund houses hold have also been invested in by other funds.
Talking about the staggering rise of the infected cases in India it has now jumped to 23,077 with a death toll of 718.