By Ashley Coutinho
Franklin Templeton Mutual Fund (Franklin MF) on Tuesday announced the launch of a new equity offering, while reiterating its long term commitment for its business in India.
The launch of open-ended dynamic asset allocation fund called Franklin India Balanced Advantage Fund (FIBAF) marks the US-based asset manager’s first such launch since its decision to wind up six debt schemes in April 2020.
“What I can say categorically is that we are not leaving India. We have been here for 26 years and we will be here for another 26 years. Given how the firm views India’s growth potential, it would be silly to leave India,” said Avinash Satwalekar, its president for India.
Inspite of everything we are still profitable and we still have a large asset base, he said. “There is no doubt that the brand has taken a beating and we will have to regain the trust of investors,” said Satwalekar, adding that the need of the hour was to re-engage with distributors and Franklin employees, who had borne the brunt of the issues faced in the last two years.
The fund house has added two new portfolio managers, Ajay Argal and Venkatesh Sanjeevi, in its investment team in October last year.
Franklin Templeton may also look to launch debt schemes in the coming months once all the monies are returned to the existing investors of the six debt schemes that were wound down, and the regulatory issues are resolved.
Total amount distributed in the six schemes under winding up is Rs 26,098 crore amounting to 103.5% of the AUM as on April 23, 2020.
FIBAF offers tactical allocation between equity and debt based on market valuations and fundamental factors-driven views. It is a dynamically-managed fund, whose equity exposure will be maintained between 65% and 100%. If the equity allocation falls below 65%, the gross equity exposure will be maintained using equity derivatives. Debt instruments will make up for the rest.
Anand Radhakrishnan, managing director & chief investment officer; Emerging Markets Equity — India, Franklin Templeton, said, “Global equity markets have corrected in recent months and continue to be volatile amidst multiple headwinds of inflation, interest rate and ongoing geopolitical tensions. Indian markets have also been impacted but have held up much better compared to major developed and EM counterparts (in dollar terms).
“Such episodes of market volatility can push investors off-course leading them to take sub-optimal decisions. With that in mind, Franklin India Balanced Advantage Fund will adopt a flexi-cap approach for equity allocation. The scheme will endeavour to invest in high quality instruments with over 80% of fixed income portfolio in AAA-rated papers. This makes it suitable for investors looking for the best of both worlds.”
The NFO will open for subscription on August 16 and will close on August 30
The balanced advantage fund is the largest hybrid category with assets under management of over Rs 1.7 trillion.