Page 20 - Banking Finance December 2020

MUTUAL FUND

A total of 11.27 lakh SIPs were regis- In its petition, FT MF requested the SC stocks.
tered in October, while 7.87 lakh were to pause redemptions, as opening of Earlier in September, Sebi announced
discontinued or whose tenure com- the funds could lead to a 'run' on the to tweak the asset allocation rules for
pleted, taking the net addition to 3.4 schemes and force the fund house to multi cap funds. According to the cir-
lakh for the month. sell debt papers at distress prices. If
cular, a multi cap fund must invest a
sold at rock-bottom prices, there would
Currently, mutual funds have over 3.37 minimum of 75% in equity and equity
be sharp declines in the net asset val-
crore SIP accounts through which in- related instruments with a minimum
ues of the schemes.
vestors regularly invest in Indian mu- 25% allocation to large-, mid- and
tual fund schemes. SIP is an invest- The Karnataka HC had ordered a stay small-cap stocks.
ment plan offered by mutual funds, on redemptions from the schemes for The existing equity schemes will be
wherein one can invest a fixed amount. a period of six weeks, after pronounc- able to reclassify themselves under the
ing its order on October 24, 2020. This new category and continue to run
Franklin Templeton's debt stay lapses on December 5, 2020. their multi cap funds in the same man-
schemes receive Rs 2,836 The petition also stated that the ner without any change in portfolio
Karnataka HC had taken an 'errone- allocation or investment process, just
crore repayments in No- ous' view of the regulations pertaining by changing the scheme's name.
vember to winding-up of the MF schemes. Sebi has restored the pre-covid cut-off

The six schemes of Franklin Templeton "…we considered all possible options timings of mutual funds, effective No-
Mutual Fund (FT MF), which were over the last few weeks to start return- vember 9. In April, Sebi had reduced
wound-up in April, received Rs 2,836 ing money to unitholders in the short- the cut-off timings of all mutual funds
crore in November. The total amount est possible time in an orderly manner. to 1 pm from 3 pm and for liquid and
received since the winding-up process This included the option of seeking overnight schemes to 12.30 pm from
was started, stands at Rs 11,576 crore. unitholder consent according to the 1.30 pm.
judgment of the Hon'ble High Court,"
These cash flows have come on the On October 19, Sebi had restored the
back of pre-payments, part-payments, FT MF said. cut-off timings to 3 pm for all schemes
maturities and coupon payments from except for debt schemes and conser-
issuers. Recent new mutual fund vative hybrid schemes.
Four of the schemes of FT MF are cash rules announced by Sebi Now, the cut-off time has been brought
positive. These schemes hold Rs 7,726 Sebi, has recently announced a slew of back to 3 pm for debt and conserva-
crore of cash, subject to fund-running measures for mutual funds industry. tive hybrid funds as well. The cut-off
expenses. The market regulator has modified time for purchase of liquid and over-
Franklin India Low Duration fund cur- certain mutual funds rules to make night funds would stand restored from
rently holds 48 percent of its assets in them more investor friendly. The re- 12.30 pm to 1.30 pm. The redemption
cash. Franklin India Ultra Short Bond cent announcement of new 'flexi cap cut-off time for equity, debt and liquid
(46 percent), Franklin India Dynamic category' under equity schemes has funds would stand restored to 3 pm.
Accrual (33 percent) and Franklin India cheered up investors who were cau- The Sebi action follows an RBI move
Credit Risk (14 percent) hold significant tious about their investments in multi extending debt market timings for
cash. cap funds due to the change in portfo- most securities to 3.30 pm, also with
lio allocation rules announced by Sebi effect from 9 November.
The fund house had recently ap- in September.
proached the Supreme Court (SC), seek- Sebi in a circular issued on November 5,
ing intervention on the judgment The markets regulator has introduced doubled the foreign investment limit
passed by the Karnataka High Court a 'flexi-cap category' for mutual funds, per mutual fund house to $600 million,
(HC), and to ensure redemptions are which will be required to invest at least from the existing $300 million. $50 mil-
halted till legal issues are resolved. The 65% of the corpus in equity but will lion would be reserved for each mutual
SC will be hearing Franklin Templeton's have no restrictions on investing in fund individually, within the overall in-
petition on December 3, 2020. large-, mid- or small-cap company dustry limit of US $ 7 billion. T

20 | 2020 | DECEMBER | BANKING FINANCE