InvestorQ : How is the Templeton episode impacting other debt funds, outside of credit risk funds?
Mary Joseph made post

How is the Templeton episode impacting other debt funds, outside of credit risk funds?

Answer
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sara Kunju answered.
5 months ago


Templeton’s decision to shut down six of its India debt schemes due to redemption pressures has caused panic among debt fund investors. Many investors in even higher quality debt funds are just exiting debt funds altogether due to the lack of transparency in most of these funds. Different investors have different concerns. While some are purely concerned about Templeton funds, others are worried about all debt funds in general. In fact, the shift had started quite some time back. Financial planners had been systematically moving their clients’ money out of credit risk funds over the past few months. The Templeton fiasco has made planners and advisors review existing investments more carefully. Most advisors are advising caution and want AA rated papers and below to be less than 15% of the debt fund portfolio. In fact, investors have been moving out of credit risk funds and even corporate bond funds and moving into gilt funds. However, the caveat is that debt as portfolio stability decision is still a key allocation.