Page 15 - Banking Finance May 2020

MUTUAL FUND

MUTUAL FUND

NEWS
NEWS
NEWS
NEWS
NEWS

Franklin Templeton mutual The fund manager had previously said increase in AUM happens due to flows
it is seeking investor approval to liqui- and returns but returns are a rela-
fund may take over 5 years date the six debt schemes. tively small component on a monthly

to return some fund to basis, especially in debt funds.
Net flows in debt mutual
customers According to data compiled by mutual
Franklin Templeton's India investors funds increase to 94224 fund analytics and research firm Pulse
may have to wait over 5 years to fully crore Labs, as of 27 May, credit risk funds
recoup their money, the asset man- saw a drop in AUM of `5,204 crore
The net monthly flows in debt mutual
ager said in an email to investors. over the past month and medium-term
funds rose from `43,431 crore in April
funds saw a drop of `1,464 crore. In
2020 to `94,224 crore in May 2020,
The timing could wind up being sooner, case of credit risk funds, this was about
according to Association of Mutual
as any sale of the underlying assets in 16% of their assets and for medium
Funds of India (Amfi). The jump of
the frozen funds in the secondary mar- duration funds, it was about 7% of
`50,793 crore is more than a 100%
ket and prepayments or accelerated their assets.
growth in monthly flows.
payments made by issuers of debt in
On the other hand, relatively low-risk
the funds would quicken the payout, However, it is unclear how much of this categories saw increases in AUM.
according to the documents. money has come into the relatively Money market funds saw an AUM in-
low-risk categories of liquid and over- crease of `7,014 crore, banking and
The development is the latest turn af- night funds and how much into catego- PSU funds saw an AUM increase of
ter the company shut six debt schemes ries like credit risk funds that saw huge `9,529 crore and corporate bond funds
last month in the country's biggest-ever redemption in the past few months. saw an AUM rise of `4,819 crore.
fund freeze, which triggered shock The total debt fund assets under man-
waves in local credit markets. agement (AUM) at the end of April "Inflows have picked up in the rela-
2020 was `7.44 trillion, and May's in- tively low-risk categories and outflows
It may take more than five years for flow of `94,224 crore has resulted in a have slowed in high-risk categories. It's
the company to return the entire 12% jump in assets. possible that some of the flows may be
amount invested in four of the funds, coming from banks given the amount
according to the documents. Invest- AUM data on categories other than of liquidity in the system," said
ments in the two remaining funds may liquid and overnight funds is disclosed Kaustubh Belapurkar, director, fund
be returned within five years, they on a daily basis and gives a rough idea research, Morningstar Investment Ad-
showed. of flows in individual categories. An visor India.

BANKING FINANCE | MAY | 2020 | 15