On Thursday Franklin Templeton Mutual Fund suddenly decided to wind up six schemes with aggregate assets under management (AUM) of over Rs 28,000 crore. The closure of Franklin Templeton’s debt schemes also weighed on the sentiment in the domestic stock market, with the Sensex ending down 1.7 per cent at 31,327.22 and Nifty closing 1.7 per cent down at 9,154.40. As it was fundholder for liquidity and good investment plans.
After this fall equity AUMS of all the AMC s are down by 25-30 per cent, creating uncertainty among investors. After this fall Industry leaders and CEOs of five leading mutual funds came together to allay investor fears and assure them of the credit quality of the portfolio held by the MF industry.
According to the experts, there will be a combination of liquidation of assets, stroke, and maturity in the portfolios and it is important to understand that there is a huge amount of quality consciousness across most portfolios in the mutual fund industry with some exceptions. This will ensure some fixed income sites.
Moreover, at the joint video conference, Milind Barve, MD, HDFC AMC, said, “It is not appropriate to brush all credit funds and all fund houses and all products in the same category. Retail investors should not panic.” Stating that there is a ‘degree of anxiety’ around credit risk fund, he pointed that “almost 30 per cent of the credit risk funds comprises AAA-rated paper and cash and another 30-50 per cent in AA or AA+ rated papers. It is not that the entire portfolio is the high yield or low-quality paper.” While the average assets of MF credit risk funds are Rs 58,361 crore, total assets of debt funds (excluding liquid and overnight funds) were Rs 6.75 lakh crore.
They also added that if all the good assets are sold then only weaker assets will be left and this may create uncomfortable situations in the future. So, investors must not panic.