Franklin Templeton announces first India debt fund since 2020 crisis; check details of the Ultra Short Duration Fund

Franklin Templeton Asset Management India has introduced its first India debt fund after it halted $3 billion ( ₹252.15 billion) of such plans four years ago, reported Bloomberg on Monday, August 19.

The new debt fund offered by the asset management company (AMC) is named Franklin India Ultra Short Duration Fund, which will open for investors from August 19 to August 28, according to a release issued by the company on Friday, as per the report.

Franklin's new debt fund will be managed by Rahul Goswami, managing director (MD) and chief investment officer (CIO) at Franklin Templeton's fixed income segment. Pallab Roy, the asset management company's fund manager, will be the portfolio manager for the fund, as per the report.

The California-based asset management firm's comeback in the Indian debt market with a new fund offer is the first since 2020. The fund house closed six of its funds resulting in the biggest forced closure of funds in India, as per the report.

The situation that resulted in the AMC's exit was fuelled by the extended shadow banking crisis in India, along with the global COVID-19 pandemic restrictions. According to the report, this created a difficult situation for the firm to sell its investments, particularly in the low-rated company notes segment.

Franklin's comeback is at a time when the country is strengthening its credit markets as the bank loan ratios taper to multi-year lows, as per the report. The new fund offered will invest in low interest-rate risk and moderate credit risk facilities along with investments into corporate bonds, certificates of deposit, commercial papers, treasury bills and government securities, according to the firm, reported the news agency.

The weighted average maturity will be between three to six months before the investors get their money.

The fund is targetting investors who have a one-to-six month investment horizon, according to the company. They aim “to deliver a combination of income and capital growth for conservative fixed income investors,” Goswami is quoted as saying in the statement.