Mutual Funds

Who will receive how much in the second payout from Franklin Templeton’s shut schemes

Maulik Madhu | Updated on April 13, 2021

Income Opportunities Fund investors will be paid for the first time

BL Research Bureau

Franklin Templeton MF has announced the distribution of ₹2,962 crore to investors of its six shut debt mutual fund schemes in the week beginning April 12. This is the second tranche of distribution by the AMC after it had shut its six debt schemes on April 23, 2020. Following the Supreme Court’s earlier direction, Franklin Templeton MF had distributed ₹9,122 crore to investors of its wound up debt MF schemes in February 2021.

SBI MF will handle the disbursement. Investors with KYC (know your customer) compliant accounts will be paid off a portion of their investment in each of the six schemes, this week.

Franklin India (FI) Ultra Short Bond Fund investors will get 28.42 per cent of their investment. Those invested in Franklin Templeton’s Low Duration Fund, Short Term Income Plan, Income Opportunities Fund, Credit Risk Fund and Dynamic Accrual Fund will receive 14.18 per cent, 13.37 per cent, 6.67 per cent, 11.22 per cent and 11.23 per cent, respectively, of their investment.

This is the first time that investors in the FI Income Opportunities Fund will be receiving payment. In February, cash flows received by the scheme had to be used for paying off the borrowers first. After that, no cash was left for distribution to investors.

The shut debt schemes have received inflows by way of maturities, part payments, pre-payment and coupons on the debt securities in their portfolio since their closure in April 2020.

How much so far

After the second payout is made, investors in the Franklin India (FI) Ultra Short Bond Fund and FI Low Duration Fund would have received a total of 68 per cent and 75 per cent, respectively, of their investment in the scheme as of April 9, 2021. Those in the FI Short Term Income Fund, FI Credit Risk Fund and FI Dynamic Accrual Fund would have got 21 per cent, 36 per cent and 48 per cent, respectively, of their investment.

What remains

According to the maturity profile of the schemes, as of March 31, 2021 (as disclosed by Franklin Templeton) the Ultra Short Bond Fund and the Low Duration Fund should be able to encash all their assets by April 2025. Three schemes, Short Term Income Plan, Dynamic Accrual Fund and Credit Risk Fund are expected to encash up to 95 per cent, 92 per cent and 84 per cent, respectively of their assets by April 2025 and the rest after that.

In case of the Income Opportunities Fund, only 53 per cent of the scheme assets are expected to be encashed until April 2025. It could, therefore, be quite a wait for investors in this scheme before they recoup their entire investment. The maturity profiles of the schemes assume that all securities will be held until maturity and all interest payments and principal repayments will be made in full.

Published on April 13, 2021

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