6 Franklin Templeton FOF Watch NAVs Drop As Debt Funds Settle

MUMBAI: The NAV of the six fund of funds (FF) of the Franklin Templeton India mutual fund fell as much as 22.42% in a single day due to the liquidation of six debt schemes at the fund house. A fund of funds (FOF) is an investment strategy to maintain a portfolio of other schemes rather than invest directly in stocks, bonds or other securities.

Net Asset Value of Franklin India Dynamic Asset Allocation FOFs (fell 16.6%), Franklin India Multi Asset Solution (fell 22.42%), Franklin India Life Stage 20 FOFs (fell 6.59 %), the Franklin India Life Stage FOFs 30 (13.51%), Franklin India Life Stage FOFs-40 (fell 17.81%) and Franklin India Life Stage FOFs-50 Plus (fell 0.52%).

“In accordance with the decision to liquidate the Franklin India Short-Term Income Plan (FISTIP) and the Franklin India Dynamic Accumulation Fund (IFAD), announced on April 23, 2020, the investments of the Fund Scheme Fund in the underlying schemes mentioned above which are the funds ended on April 24, 2020. Therefore, given the lack of immediate liquidity of the investment, these funds were reasonably valued, “said a spokesman for the Franklin Templeton Mutual Fund. He added in addition that the fund house is reworking the fund’s underlying asset allocation of the fund schemes and will announce the changes to investors shortly.

Asset allocation funds have a combination of equity and debt, where the equity ratio increases with lower valuations. At the end of March, the fund had a 50:50 allocation for equity and debt in the Dynamic Asset Aslocation Fund.

“Investors in the scheme must stay invested, as the bad news is built in and there is no point in going out at a loss now. When the debt securities in the schemes are liquidated, as a holder they will get their money back, ”says Amol Joshi, Founder, Plan Rupee, a Mumbai-based distributor.