InvestorQ : Why has Franklin Templeton Mutual Fund wound up a number of its debt fund schemes?
NISHA Nayak made post

Why has Franklin Templeton Mutual Fund wound up a number of its debt fund schemes?

Answer
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5 months ago


Please note that there are 6 funds that Franklin Templeton is winding up and all these are credit risk funds. These are funds which invest heavily in private debt in search for higher yields. Credit risk funds have come under the scanner after the defaults by the Zee group, Reliance ADAG, Dewan Housing and IL&FS. These defaults have resulted in investors becoming wary of credit funds. In the last few weeks, the combination of COVID-19 and the potential of corporate defaults have taken the charm away from these credit risk funds. Mutual fund flows have also been hinting at weak flows into credit risk funds and this decision probably reflects that trend. Franklin Funds has blamed the severe market dislocation as well as the illiquidity in these bonds, as the reasons. This trend could be followed by many more funds too.