YTread Logo
YTread Logo

Vodafone Idea Impact: What happened to Franklin Templeton Debt Mutual Funds

Vodafone Idea Impact: What happened to Franklin Templeton Debt Mutual Funds
if you're an investor in

franklin

templeton

dead scheme's you would have seen a major drop in your fund values in this video we tell you

what

has

happened

and why it has

happened

there are also some major lessons to be drawn from this crisis hi this is Neil burrata from the mint money team and this video is all about

what

has

happened

with waterphone

idea

and the

mutual

funds

that held its dead paper interestingly enough this is not the first time that this has

happened

with

Franklin

vodafone idea impact what happened to franklin templeton debt mutual funds

Templeton

in 2016

Franklin

was exposed to bonds issued by JSP L which defaulted at that time the front house took that dead paper on its own books meaning that it protected its investors from those losses however that is not happening this time around

Franklin

Templeton

a MC along with three other

mutual

funds

UTI Ulta Bella Sun Life and Nippon India whole papers of waterphone

idea

what

's

happened

with

what

ever an

idea

is that the Supreme Court has dismissed a review petition concerning a gr
and hence has brought a liability of around 50,000 crores on more of an

idea

to be paid by 23rd Jan this proposition looks almost impossible for that company and as a result

Franklin

Templeton

AMC decided to proactively write off the bonds of waterphone

idea

that it held the exposure in the dead schemes of

Franklin

Templeton

mutual

fund to ward off one

idea

is in the range of 4 to 7 percent this is the amount by which the various dead schemes of

Franklin

Templeton

which had exposure were down
buying as a result

Franklin

Templeton

has written off its entire exposure to waterphone

idea

on Friday other AMC's took writedowns of their holdings of water for

idea

debt

of around 30 to 60% of the value in other words there could be more in store on the flip side if

Vodafone

idea

succeeds in his curative petition or if the Government of India grants a reprieve to water phone

idea

in making payments the na vi's of those

funds

could also recover some of the other AMC's even have a
vodafone idea impact what happened to franklin templeton debt mutual funds
higher exposure as a percentage of scheme assets to word of own

idea

for example in UK I credit risk fund the exposure is 17 point 55 percent of scheme assets meaning that if the exposure completely defaults the scheme will lose seventeen and a half percent of its value now you might be wondering why is there no side pocketing in this case the answer is that since there has been no formal downgrade yet by a credit rating agency such as crystal Kerr India ratings and so on the

mutual

fund

Franklin

Templeton

cannot go for side pocketing this can only be done when the papers of an issuer are downgraded below investment-grade and that has not formally

happened

yet now the next question is and perhaps the most important one will you get your money back this is possible it has been reported that waterphone

idea

is contemplating a curative petition in the Supreme Court in addition the government might extend the time period forward of an

idea

to make the payments and the company might
still survive it is difficult to say one way or the other now

what

can you as an investor do about it if you are a

franklin

templeton

investor there is nothing you can do the exposure has already been written off in addition the AMC has restricted inflows in to the affected schemes at rupees 2 lakh per day so if you're a speculator and you want to enter the

funds

in hope of a recovery and windfall this too is difficult if you're an investor in any of the other AMC's you can exit by
vodafone idea impact what happened to franklin templeton debt mutual funds
the other MCS could write down their exposure on any day and you might just end up with a vastly lower nav than

what

you thought you were getting the policing of sujin Financial Advisors has said that investors should stay put but she's made an exception in case of UTI credit risk fund which has as you might recollect a 17-point 55% exposure to word of one

idea

if you are at considering an exit make sure that you have calculated the tax and exit load payable and consider this while making
your decision are there any lessons that you can draw from this crisis for the long term yes there are normally investors only perceive credit risk in credit risk

funds

but as this episode shows credit risk can also line other kinds of

funds

like low duration short duration or income opportunities senior executives have told me that

franklin

templeton

AMC communicated to advisors that certain schemes such as the affected ones have had high credit risk and they were fully aware when such schemes
were recommended to clients but this was not discussed in the wider public and the common man on the street was not aware the only solution for you when you're investing in risky

debt

funds

is to go through a good advisor thank you for watching mint money we will keep you updated on further developments on this story thank you and goodbye