InvestorQ : How do you think the Templeton case has impacted the state of credit risk funds and other debt funds in India?
Debbie Mascarenhas made post

How do you think the Templeton case has impacted the state of credit risk funds and other debt funds in India?

Answer
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Crowny Pinto answered.
4 months ago


The impact across other debt funds has been quite huge. Just a week after Templeton decided to shut down six of its funds, credit risk funds across the board saw redemptions to the tune of 25% of overall AUM in just four days to Rs.36,000 crore. The impact was not just felt on the credit risk funds but also on all the non-gilt funds where the funds had an exposure to credit risk. Ironically, many of the funds had taken on huge credit risk in short duration and medium duration funds. Short duration funds invested in structured debt with 7-10 year maturity. Large corporate investors and institutions were not too pleased with the risks assumed by these credit rating funds in terms of quality. That showed in redemptions as institutional investors made a rush for the exits.