Franklin Templeton AUM melts on debt crisis

Suresh P Iyengar Mumbai | Updated on October 07, 2020

The average asset under management of Franklin Templeton India, which has been in news for all the wrong reasons, dipped 32 per cent to ₹79,197 crore in the September quarter from its pre-debt crisis level of ₹1.16 lakh crore logged in March quarter.

The average AUM is marginally lower compared to ₹79,808 crore logged in the June quarter.

On the other hand, the quarterly assets of the mutual fund industry increased in September quarter to ₹27.60 lakh crore against ₹27.03 lakh crore logged in March quarter and ₹24.63 lakh crore registered in June quarter.

The fund house had recently sacked 20 of its employees in sales and relationship manager cadre. In response to a BusinessLine query, a Franklin Templeton spokesperson said these departures are the result of restructuring in local distribution and allied teams to ensure that the fund house is efficiently organised and resourced to create a sustainable organisation positioned for long-term growth.

Franklin Templeton India has been in the eye of a storm ever since it abruptly closed six of its debt funds with cumulative asset under management of ₹25,000 crore in April as it could not meet the redemption pressure. It claimed the decision was taken to protect investors interest due to the liquidity constrains in the debt market on the back of Covid pandemic.

Though the fund house has received cumulative returns of over ₹8,000 crore in last five months, investors have moved the Supreme Court against closure of the schemes. As per the direction of the Apex Court, the Karnataka High Court has finished hearing in the case and all set to pronounce its verdict.

Even while the dust seems settling down, a SEBI ordered forensic audit report of Choksi and Choksi has pointed that some of the key managerial person of the fund house had sold their investments in six debt schemes ahead its closure.

However, a Franklin Templeton spokesperson said inspections and third-party audits fall within the purview of Sebi’s oversight of mutual funds and the fund house is cooperating fully with Sebi. The statements appearing in your email are not accurate, nor has Sebi come to any such findings at this time. Employees who made investments in the FTMF schemes continue to hold substantial investments in the affected schemes.

“We have already communicated the reasons for winding up and request our investors not to be swayed by unverified or speculative reports. We continue to follow due process, both in making investment decisions and with regard to the winding up of the funds,” he said.

Published on October 07, 2020

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