Clarification from Franklin Templeton

Yesterday, as an investor in Franklin Templeton’s Low Duration fund, I received an email from Sanjay Sapre, President, Franklin Templeton Asset Management (India) Pvt. Ltd. The email quoted

The press release issued by Chennai Financial Markets and Accountability (CFMA) citing the FIR,  is replete with various misleading and baseless allegations, besides being inappropriate, as the matter is currently subjudice. We are not aware of the antecedents of CFMA and as admitted by them in their original complaint, none of their members were unitholders in the six impacted schemes

The email to the investors was request for them not to believe in ‘market rumours’ and baseless allegations. It added that the press release issued by CFMA citing the FIR, is replete with various misleading and baseless allegations, “besides being inappropriate”, as the matter is currently subjudice.

The email focus on the fact that four out of the six schemes are already cash positive. And that the schemes under winding up have received over INR 7,184 crore from maturities, pre-payments, and coupons. It also states

The books of the six impacted schemes are regularly audited by internal auditors, statutory auditors, auditors appointed by the regulators etc. and none of them have ever made any observation regarding misutilization of funds by the schemes.

Here is the fund performance where I have parked, and also had recommended customers also. Note, I don’t get commission or paid to recommend a fund – and that time of recommendation, these funds were doing well.

The once safe heavens for “better than” FD concepts took a beating thanks for the sudden change in the economy. However, as you can see that the fund that I hold has started to recover , though the returns are less than FD.

This incident has proven that no matter what precautions and research you do, debt funds always have that default risk to play with, which can significantly dampen your returns. Hence, I always suggest FD/PPF/SSY/tax free government bonds as a part of the debt. You may ask why did I put money here – simple – I did not know that it would default!

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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