Franklin Plans First India Debt Fund After $3 Billion Freeze

(Bloomberg) -- Franklin Templeton Asset Management India Pvt. will introduce its first India debt fund after it wound up 252.15 billion rupees ($3 billion) of such plans more than four years ago. 

The new fund offer of Franklin India Ultra Short Duration Fund will open on Aug. 19 and close on Aug. 28, the asset manager said in a release Friday. It will be managed by Rahul Goswami, chief investment officer and managing director for India fixed income at Franklin Templeton, and portfolio manager Pallab Roy. 

Franklin is returning to India’s debt market with a fund offer for the first time since April 2020, when it surprisingly shut six funds, making it the biggest-ever forced closure in the country. The move came after a prolonged shadow banking crisis in the nation and pandemic restrictions made it difficult for the asset manager to sell its investments, especially in lower-rated company notes.

The launch comes amid a strengthening in India’s credit markets, with banks’ bad loan ratios narrowing to multi-year lows.

The open-ended fund, with relatively low interest-rate risk and moderate credit risk, will invest in corporate bonds, certificates of deposit, commercial papers, treasury bills and government securities, it said. Weighted average maturity before the investor gets money will be between three and six months.

The fund is aimed for investors who have a one to six month investment horizon, according to Franklin. It aims “to deliver a combination of income and capital growth for conservative fixed income investors,” Goswami said in the release.

(Updates with details in last paragraph. A previous version of the story corrected the wound up amount after Franklin updated numbers.)

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