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

If you are an investor in the dead Franklin Templeton scheme, you would have seen a significant drop in the value of your

funds

. In this video, we tell you

what

happened

and why it

happened

. Some important lessons can also be drawn from this crisis. I'm Neil Burrata from the Mint Money team and this video is about

what

happened to Waterphone Idea and the

mutual

funds

that kept their paper dead. Interestingly, this is not the first time this has happened with Franklin Templeton in 2016. Franklin was exposed to bonds issued by JSP L which defaulted at which time the main house took that dead paper on its own books, meaning it protected its investors of those losses;

However, that is not happening this time with Franklin Templeton, an MC along with three other UTI Ulta

mutual

funds. Bella Sun Life and Nippon India, full newspapers on the

idea

of ​​water phones. What happened with any

idea

is that the Supreme Court dismissed a review petition relating to a gr and thus imposed a liability of around Rs 50,000 crore on an idea to be paid by the 23rd. In January, this proposal seems almost impossible for that company and, as a result, Franklin Templeton AMC decided to proactively cancel Waterphone's bonds, the idea being that it had exposure in the dead Franklin Templeton mutual fund schemes to protect itself from an idea that is in the range of 4 to 7 percent, this is the amount by which Franklin Templeton's various dead schemes that had exposure were reduced by buying as a result, Franklin Templeton canceled all of its exposure to the water phone idea on Friday, other AMCs took amortization of their water reserves for the idea.

debt

of about 30 to 60% of value;

In other words, there could be more on the other side if Vodafone Idea is successful in its curative petition or if the Government of India grants a reprieve to Water Phone Idea in na vi payments. of those funds could also recover some of the other AMCs, they even have higher exposure as a percentage of plan assets according to their own idea, for example in UK credit risk fund I, the exposure is 17.55 percent of the plan's assets, meaning that if the exposure defaults completely, the plan will lose seventeen and a half percent of its value. Now you might be wondering why there is no side pocket in this case, the answer is that since there has not yet been a formal downgrade by a credit rating agency like Crystal Kerr India. ratings, etc., the Franklin Templeton mutual fund cannot choose to hold the bag, this can only be done when an issuer's papers are downgraded below investment grade and that has not yet formally happened.

Now the next question is, and perhaps the most important will be. you get your money back, this is possible, it has been reported that the water phone idea is contemplating a curative petition in the Supreme Court, in addition, the government could extend the time period before an idea to make payments and the company will still could survive, it's hard to say one way or another now, what can you as an investor do about it? If you are a Franklin Templeton investor, there is nothing you can do. The exhibition has already been cancelled. Also, the AMC has restricted entries into the affected schemes at Rs 2 lakh per day, so if you are a speculator and want to enter the funds in the hope of recovery and a windfall, this is also difficult.

If you are an investor in any of the other AMCs, you can exit through the other MCS. Write down your exposure on any given day and you could end up with much lower navigation than you thought you were getting. Watchdog sujin Financial Advisors has said investors should stay put, but has made an exception in the case of credit risk fund UTI. which, as you may remember, has a 17 point exposure, 55% to the word of an idea. If you are considering an exit, make sure you have calculated the exit tax and charge payable and consider this when making your decision.

Is there a lesson I can learn? We can profit from this crisis in the long term. Yes, there are typically investors who only see credit risk in credit risk funds, but as this episode shows, credit risk can also cover other types of funds, such as low duration, short duration or opportunity funds. income. Senior executives have told me that

franklin

templeton

AMC communicated to its advisers that certain schemes, such as those affected, were of high credit risk and were fully aware when such schemes were recommended to clients, but this was not discussed in the general public and the common man on the street was unaware.

The only solution for you when investing in risky

debt

funds is to use a good advisor. Thanks for watching Mint Money. We will keep you informed about future developments in this story. Thank you and goodbye.