Franklin Templeton mutual fund launches first tier of debt funds after NFO

Franklin Templeton Mutual Fund (Franklin MF) on Tuesday announced the launch of the Franklin India Balanced Advantage Fund (FIBAF) – the US-based asset manager’s first new program since a regulatory crisis following its decision to liquidate six of its debt programs in April 2020.

“We believe in growing assets by delivering performance. That said, it is a broad category and we are not present in it. We want to close that gap,” said Anand Radhakrishnan, Managing Director and Chief Investment Officer for Emerging Markets Equities (India), Franklin Templeton. The last NFO (new fund offering) in the equity category launched by the fund house dates back more than 10 years.

The Balanced Benefit Fund is one of the largest scheme categories with assets under management of over Rs 1.7 trillion.

The response to Franklin MF’s NFO will be watched closely by industry players to gauge the impact of regulatory issues on investor sentiment.

“We look forward to embarking on a new chapter of growth in India, and the launch of FIBAF represents the first in a long series of steps towards that end,” said Avinash Satwalekar, President of Franklin Templeton-India, licensor That fund house’s brand image has taken a bit of a beating and it’s working to rebuild investor confidence.

Satwalekar, who took over as head of the fund house in June 2022 replacing Sanjay Sapre, reiterated Franklin Templeton’s commitment to the Indian market. “I want to say categorically that we are not leaving India,” he said.

There were rumors that the fund house might exit India after tough regulatory action against it last year.

In June 2021, the Securities and Exchange Board of India (Sebi) imposed a fine of Rs 5 crore on the fund house and ordered it to return more than Rs 500 crore for “several irregularities” in the management of its six programs of debt which were liquidated in April 2020. The regulator also ordered the fund house to repay more than Rs 450 crore collected in management and investment advisory fees over 22 months. In addition, he imposed a two-year ban on the launch of new debt programs for alleged irregularities.

Franklin Templeton challenged Sebi’s order in the Securities Appellate Tribunal (SAT), where hearings are expected to begin soon. The fund house also obtained interim relief from the SAT, which includes removing the ban on launching new programs.

The fund house, however, said it would not launch any new fixed income programs until the regulatory issue was resolved. The proposed new regime falls under the category of equity-focused funds.

The program’s NFO opens on August 16 and ends on August 30.

Following the lifting of the ban on NFOs earlier this month, a host of new schemes are being launched by fund companies. Satwalekar said bundling multiple NFOs can impact subscriptions, but “it’s hard to quantify how much.”

Dolores W. Simon