Franklin Templeton lost 28664 Crores debt fund AUM in 2020!

Image of empty chairs to signify the flight of aum as Franklin Templeton Loses 28664 Crores debt fund AUM in 2020

Published: May 15, 2020 at 11:00 am

Last Updated on

While corporate investors withdrew from several Franklin debt funds forcing the closure of six funds (a first in India), the AMC lost 28,664 Crores of debt fund AUM from 31st Dec 2019 to April 30th 2020. Amusingly, one of their debt funds grew 520% in AUM! A look at the change in their debt AUM.

Franklin India Feeder – Franklin U.S. Opportunities Fund increased 32% over this period from  1148 Crores (Dec 31st 2019) to 1515 Crores (April 30th 2020). Interest in this fund seems to have increased after the fall in the US markets.

Franklin India G-Sec Fund saw a 32% growth from 226 Crores to 298 Crores probably in anticipation of rate cuts. The AUM of Franklin India Banking & PSU Debt Fund moved up 10% – 1021 to 1126 Crores. Franklin India Corp Debt Fund fell from 1404 Crores to 1072 Crores, a 24% drop.

Franklin India Floating Rate Fund registered a 38% drop in AUM from 402 to 250 Crores. This is not one of the six closed funds. It was able to manage due to the credit quality and short-term nature of the portfolio.

The same reasoning will also apply to Franklin India Savings Fund – part of my Handpicked List of Mutual Funds April 2020. This registered the second-biggest drop in AUM for Frankin. It fell from 4724 Crores to 1895 Crores – a 60% drop.

The fact that it is still open for business either suggests that the quality, short-term non-gilt segment of our bond market has become more liquid or the urgency for cash is not as much as it was during the 2008 financial crisis. See: How the 2020 debt fund crisis is a repeat of 2008: Can this be avoided?

The largest drop was seen for Franklin India Liquid Fund-Super Inst:  From 12529 Crores to 3582 Crores, a 71% drop.

Join our 1500+ Facebook Group on Portfolio Management! Losing sleep over the market crash? Don't! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free! Did you miss out on the lockdown discount? You can still avail it! Follow instructions in the above link!

Franklin India Overnight Fund AUM increased from a paltry 173 Crores to 1071 Crores, a 520% increase, signifying how cash became king in 2020.

The closed six funds registered huge losses (the reason for the closure). The numbers are in crores and represent the change in AUM from Dec 31st 2019 to April 30th 2020.

Franklin India Dynamic Accrual Fund:  3851 to  2437 (-37%)
Franklin India Ultra Short Bond Fund-Super Inst 16894 to  9591 (-43%)
Franklin India Credit Risk Fund 5899 to  3307 (-44%)
Franklin India Income Opportunities Fund 3100 to 1638 (-47%)
Franklin India Low Duration Fund 4627 to  2342 (-49%)
Franklin India ST Income Plan 10964 to 5316 (-52%)

The combined AUM loss from these is 20,705 Crores.  Another 2830 Crores lost from Franklin Savings, 5649 Crores from Franklin Liquid Fund. The overall loss is 28,664 Crores for all debt funds.

Assuming a 1% expense fee, this is a potential income loss of about 250-300 Crores.  According to the AMC financials as on Sep 2019, the total income fell from 921 Crores in Sep 2018  to 874 Crores in Sep 2019. The AMC will have to brace itself for a big fall in Sep 2020. Will institutional investors return? Will the AMC survive? Some tough days ahead for them.

 

Do share if you found this useful
Share your thoughts on this topic at the  Reddit freefincal_user_forum

Reach your financial goals like a pro! Join our 1600+ Facebook Group on Portfolio Management! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps