After 2.5 years, Franklin Templeton Mutual Fund launches a new program. They announced the Franklin India Balanced Advantage Fund (FIBAF) on Tuesday.
Franklin Templeton Mutual Fund (FT MF) will introduce a balanced advantage mutual fund. The fund company has got Sebi’s clearance to create a balanced advantage fund. This is the asset manager’s first new plan since a regulatory issue in April 2020, when it decided to shut six of its debt schemes.
“We believe in increasing assets by producing results. Nevertheless, this is a substantial area in which we do not participate. Franklin Templeton’s managing director and chief investment officer for emerging markets equities (India), Anand Radhakrishnan, said that the company intends to fill this void. The fund house’s last NFO (new fund offer) in the equity category came out more than 10 years ago.
The New Fund Offer (NFO) begins on 16 August 2022 and concludes on 30 August 2022, during which time units will be sold at Rs. 10 per unit.
The fund strategically invests stock and debt based on market values and fundamental considerations. The program is appropriate for people who want to capitalize on the growth prospects presented by stocks. It also aims to decrease market volatility risk.
FIBAF is a fund managed dynamically. Similar to other blanched advantage funds or BAFs, the equity exposure will range between 65% and 100%. If the stock allocation falls below 65 percent at any time, equity derivatives will be used to maintain the gross equity exposure. Debt instruments will comprise the remainder.
The balanced advantage fund is one of the biggest plan types, with about Rs 1.7 trillion in assets under management. Industry participants will closely monitor the reaction to Franklin MF’s NFO to determine the effect of regulatory issues on investor sentiment.
Avinash Satwalekar, president of Franklin Templeton India, said, “This new fund is designed for investors seeking a balanced exposure to equities and debt over the long term, while also capitalizing on market opportunities on occasion. In addition to the advantages of diversity, this formula-driven method with its built-in “buy-sell” discipline helps to counteract the behavioral biases created by greed and fear.”
Satwalekar, who took over as head of the fund house in June 2022 when Sanjay Sapre left, said that Franklin Templeton is still committed to the Indian market. He said, “I like to state definitely that we will not be leaving India.” Satwalekar recognized rumors that the firm will follow in the footsteps of its other international competitors by leaving India, particularly in light of the Sebi’s action against debt schemes, but he stated clearly that this is not the case.
Due to a shortage of liquidity in the debt markets, FT MF had a tough time after closing six debt schemes. Several investors filed a lawsuit against the investment firm. Although the schemes have already repaid the majority of the investors’ money, the legal actions have not yet been resolved.
The legal dispute on whether or not Franklin Templeton took excessive risks is ongoing. Franklin Templeton filed an appeal with the Securities Appellate Tribunal after the capital markets regulator, Securities, and Exchange Board of India (SEBI), imposed hefty fines on the fund house and its senior officials and demanded that it return the fund management fees it had earned in the months leading up to its closure (SAT).
