In 2020, when the world was gripped by the pandemic, asset manager Franklin Templeton had to wind up six fixed income schemes it managed in India amid redemption pressures and liquidity issues in the bond market. The move had created panic among debt fund investors.
Two years later, the fund is looking to make a comeback. On cards are a slew of new products that it intends to launch over the next several months, while its new India head is also re-engaging with distribution partners and even employees as it looks to move ahead from the past crisis and rebuild its brand.
“There is no doubt that the brand has taken a beating. You have to rebuild that and re-engage. For a combination of things, we have not seen a lot of our partners in the past two-and-a-half to three years. We have to go and engage and that is precisely what we have been doing,” said Avinash Satwalekar, who was appointed as the president of Franklin Templeton India MF earlier this year.
He said the interactions thus far had been generally positive and while there were concerns still, there was confidence in the brand. Satwalekar noted that the fund house has paid back 103.50 per cent of the assets under management in the six debt schemes, when they were shut.
Franklin Templeton has been among the oldest foreign mutual fund managers in India. While several others set shop in India and then wound up after a few years, Franklin has been around for 26 years. Satwalekar stressed that the company had no plans to exit.
“There have been a lot of rumours, I also remember reading whole host of things that Franklin is going to leave India. I can say categorically is that we are not leaving India. It would be silly to leave India, especially given that, in spite of everything, we are still incredibly profitable,” he said.
According to data from Association of Mutual Funds of India, Franklin Templeton MF had Rs 58,811 crore in average assets under management (AUM) in the April-June quarter of 2022, compared with Rs 79,808 crore in April-June quarter of 2020 (excluding domestic fund of funds).
Satwalekar said since the outflows that happened in the wake of the crisis back in 2020, the AMC has seen its AUMs stabilise, and more funds are now seeing a recovery happening and moving into the positive net sales territory.
On Tuesday, Franklin Templeton launched a balanced advantage fund (BAF). This is the first equity-oriented fund launched by Franklin Templeton in almost a decade.
BAF is a hybrid fund category, investing in equity and debt and where the asset allocation between the two classes is managed dynamically based on the prevailing market conditions. Several mutual fund houses, including ICICI Prudential, Axis, Edelweiss, HDFC MF and others, already offer BAF. But, it was missing from Franklin’s portfolio.
Franklin Templeton will adopt a flexi-cap approach (investing across large, mid and small cap) for the equity portion of the scheme. For the debt portion of the scheme, the endeavour will be to invest in high quality instruments with over 80 per cent in AAA rated papers.
The fund house plans to launch several more products over six to nine months as it looks to fill the gaps and also attract new investors.
“Broadly speaking, there are two pools of buckets where we are looking at new products. One is where there are large pools of capital where we don’t have a presence and the other bucket is where we have unique capabilities,” said Satwalekar.
