Franklin Templeton Debt Schemes- the way forward.

Franklin Templeton Debt Schemes:

Where have they invested your money and what’s the way forward?

                                        

                                                by Rajeev Pathak

Image courtesy Pexels by Monstera

         Franklin Templeton Mutual Fund, one of the most reputed mutual funds in India with even more reliable parentage abroad, has given a shock to its investors by declaring winding up of its six debt schemes with a total of approx. Rs.31,000/- crore of assets. It means no fresh investment will be accepted in these schemes. Not only this, investors will not be able to redeem the same at their wish. Its only the Administrator who will decide how to liquidate its portfolio and when to repay to its investors.

Till now, we were being told by AMCs (Assets Management Companies) and  AMFI (Association Of Mutual Funds in India) that investment in mutual funds are subject to Market Risk,  now they will have to add that investment in mutual funds  are also subject to Credit Risk and publicize it.

         Now let us learn where the AMC has invested our hard-earned money. Following are the TOP 10 holdings of these schemes, along with their Credit Rating at the time of investment, Market Value, and percentage of Assets:

1.    Franklin India Ultra Short Bond Fund (FIUBF)

PNB Housing Finance Ltd* CARE AA+ 84447.59 7.70

Indostar Capital Finance Ltd* CARE AA- 82997.46 7.57

Clix Capital Services Pvt Ltd* CARE AA- 82610.30 7.53

Vedanta Ltd* CRISIL AA 79295.30 7.23

Piramal Enterprises Ltd* ICRA AA 58100.21 5.30

JM Financial Credit Solutions Ltd* ICRA AA 54020.36 4.93

Bharti Airtel Ltd* CRISIL AA 48537.90 4.43

Edelweiss Rural & Corporate Services

Ltd* ICRA AA- 46860.60 4.27

Nuvoco Vistas Corporation Ltd* CRISIL AA 37720.99 3.44

Segregated Portfolio 1

8.25% Vodafone Idea Ltd - 10JUL20

2.    Franklin India Low Duration Fund (FILDF)

Greenko Clean Energy Projects Pvt Ltd*/## CARE A+(CE) 30140.37 11.01

JM Financial Asset Reconstruction Co Ltd* ICRA AA- 29548.77 10.79

Renew Power Ltd* CARE A+ 21700.00 7.93

Ess Kay Fincorp Ltd* CRISIL A 19840.26 7.25

Small Business Fincredit India Pvt Ltd* ICRA A 17339.49 6.33

Renew Solar Power Pvt Ltd* CARE A+(SO) 15314.25 5.59

Sterlite Power Grid Ventures Ltd* IND A+ 14591.47 5.33

Shriram Transport Finance Co Ltd* CRISIL AA+ 13603.13 4.97

Edelweiss Rural & Corporate Services Ltd* ICRA AA- 11908.60 4.35lin

Segregated Portfolio 1

8.25% Vodafone Idea Ltd - 10JUL20

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Low Duration Fund - Segregated Portfolio 2

(10.90% Vodafone Idea Ltd 02SEP2023 P/C 03SEP2021)

Vodafone Idea Ltd CARE BB- 0.00 100.00

3.    Franklin India Short Term Income Plan (FISTIP)

Shriram Transport Finance Co Ltd* CRISIL AA+ 82555.69 11.64

Adani Rail Infra Pvt Ltd* BWR AA-(CE) 56532.00 7.97

Edelweiss Rural & Corporate Services

Ltd* ICRA AA- 50441.43 7.11

Piramal Capital & Housing Finance

Ltd* CARE AA 36968.04 5.21

Renew Power Ltd* CARE A+ 36245.77 5.11

Rishanth Wholesale Trading Pvt Ltd* IND A 35258.79 4.97

Rivaaz Trade Ventures Pvt Ltd* BWR AA-(SO) 33544.05 4.73

S. D. Corporation Pvt Ltd* CARE AA(CE) 30590.56 4.31

Franklin India Short Term Income Plan - Segregated Portfolio 1

(8.25% Vodafone Idea Ltd - 10JUL20

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Short Term Income Plan - Segregated Portfolio 2

(10.90% Vodafone Idea Ltd 02SEP2023 P/C 03SEP2021)

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Short Term Income Plan - Segregated Portfolio 3

(9.50% Yes Bank Ltd CO 23 Dec 2021)

Yes Bank Ltd CARE D 0.00 100.00

4.    Franklin India Credit Risk Fund (FICRF)

Shriram Transport Finance Co Ltd* CRISIL AA+ 47834.02 10.79

Adani Rail Infra Pvt Ltd* BWR AA-(CE) 35332.50 7.97

Piramal Enterprises Ltd* ICRA AA 34556.74 7.79

Rishanth Wholesale Trading Pvt Ltd* IND A 23170.06 5.23

Coastal Gujarat Power Ltd* CARE AA(CE) 17806.03 4.02

S. D. Corporation Pvt Ltd* CARE AA(CE) 17756.24 4.00

Piramal Capital & Housing Finance Ltd* CARE AA 17127.50 3.86

Hinduja Leyland Finance Ltd* CARE AA- 16825.34 3.79

Uttar Pradesh Power Corporation Ltd* CRISIL A+(CE) 33771.19 7.62

Andhra Pradesh Capital Region

Development Authority* CRISIL A+(CE) 30911.82 6.97

Franklin India Credit Risk Fund - Segregated Portfolio 1

(8.25% Vodafone Idea Ltd - 10JUL20)

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Credit Risk Fund -Segregated Portfolio 2

(10.90% Vodafone Idea Ltd 02SEP2023 P/C 03SEP2021)

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Credit Risk Fund - Segregated Portfolio 3

(9.50% Yes Bank Ltd CO 23 Dec 2021)

Yes Bank Ltd CARE D 0.00 100.00

5.    Franklin India Dynamic Accrual Fund (FIDA)

Shriram Transport Finance Co Ltd* CRISIL AA+ 26739.85 8.57

Piramal Capital & Housing Finance

Ltd* CARE AA 19240.04 6.17

Vedanta Ltd* CRISIL AA 15017.35 4.81

Adani Rail Infra Pvt Ltd* BWR AA-(CE) 14133.00 4.53

India Shelter Finance Corporation Ltd* ICRA A 11351.31 3.64

Tata Motors Ltd* CRISIL AA- 9963.49 3.19

Edelweiss Rural & Corporate

Services Ltd* CRISIL AA- 9918.20 3.18

Hero Solar Energy Pvt Ltd* ICRA A 9905.73 3.18

S. D. Corporation Pvt Ltd* CARE AA(CE) 9860.79 3.16

Uttar Pradesh Power Corporation Ltd* CRISIL A+(CE) 18008.33 5.77

Franklin India Dynamic Accrual Fund - Segregated Portfolio 1

(8.25% Vodafone Idea Ltd - 10JUL20

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Dynamic Accrual Fund - Segregated Portfolio 2

(10.90% Vodafone Idea Ltd 02SEP2023 P/C 03SEP2021)

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Dynamic Accrual Fund - Segregated Portfolio 3

(9.50% Yes Bank Ltd CO 23 Dec 2021)

Yes Bank Ltd CARE D 0.00 100.

6.    Franklin India Income Opportunities Fund (FIIOF)

Piramal Capital & Housing Finance

Ltd* CARE AA 25640.26 10.23

Shriram Transport Finance Co Ltd* CRISIL AA+ 20940.16 8.36

Coastal Gujarat Power Ltd* CARE AA(CE) 20505.34 8.18

Rivaaz Trade Ventures Pvt Ltd* BWR AA-(SO) 13696.13 5.47

Hinduja Leyland Finance Ltd* CARE AA- 12801.38 5.11

DCB Bank Ltd* CRISIL AA- 11860.44 4.73

Adani Rail Infra Pvt Ltd* BWR AA-(CE) 11777.50 4.70

Sadbhav Infrastructure Project Ltd* CARE A-(CE) 10537.74 4.21

Uttar Pradesh Power Corporation

Ltd* CRISIL A+(CE) 17947.78 7.16

Andhra Pradesh Capital Region

Development Authority* CRISIL A+(CE) 11452.43 4.57

Franklin India Income Opportunities Fund - Segregated Portfolio 1

(8.25% Vodafone Idea Ltd - 10JUL20)

Vodafone Idea Ltd CRISIL B+ 0.00 100.00

Franklin India Income Opportunities Fund - Segregated Portfolio 2

(10.90% Vodafone Idea Ltd 02SEP2023 P/C 03SEP2021)

Vodafone Idea Ltd CARE BB- 0.00 100.00

Road ahead:

          It may be observed from the above portfolio majors that AMC has taken huge exposure in infrastructure, telecom, real estate, and NBFCs. We all are aware that these sectors are not doing well for quite some time now. So, what’s the option left with an investor. Unfortunately, None. An investor has to wait till AMC achieves sufficient liquidity level to honor any redemptions. Let us take an example of a bank. If a bank has given term loans to its borrowers maturing in 3 to 10 years and suddenly, if all depositors ask for their deposits, the bank will be in trouble as we have seen in the case of PMC Bank and Yes Bank. We also know that RBI, the banking regulator had to come into the picture by bringing these banks under a moratorium.  Similarly, in this case,  money is invested in Bonds of various corporate entities, out of which some have already defaulted or are likely to default on due dates. AMC has earlier segregated such investments, but now it has decided to wind down the whole of these funds. Now the alternative left with AMC  is to wait till the date of maturity of each paper or liquidate in the market, for which there have to be buyers willing to buy at a reasonable price. Meanwhile, efforts are also on to improve liquidity in the market for these securities by RBI through banks & NBFCs.

It also draws our attention and compel us to conclude that AMCs need to have a proper Asset- Liability Management (ALM) System in place and last but not the least, quality of assets need to be examined much more diligently and shortcomings to be removed.

         Readers may share their views in the comments section given just below.

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