Franklin Templeton Mutual Fund has launched its first debt fund in the Indian market, marking its re-entry into this sector after winding up Rs 30,800 crore ($3.7 billion) worth of similar plans over four years ago. The newly introduced fund, Franklin India Ultra Short Duration Fund (FIUSDF), began its subscription period on Monday, August 19, and is open for investment until August 28, 2024. The scheme will reopen for continuous sale and repurchase on August 30, 2024.
The main objective of the FIUSDF is to provide investors with a blend of consistent income and high liquidity through investments predominantly in short-term debt instruments and money market securities.
The fund’s investment portfolio will consist of non-convertible debentures, bonds, certificates of deposit, commercial papers, treasury bills, and government securities.
With a Macaulay duration spanning from 3 to 6 months, the FIUSDF aims to maintain a short-term maturity profile for the securities held within its portfolio.
Top points
Fund Type: Open-ended
Scheme Category: Debt Scheme – Ultra Short Duration Fund
Minimum Subscription Amount: Rs 5,000
Units Price During NFO: Rs 10 per unit
Exit Load: Nil
Benchmark: Nifty Ultra Short Duration Debt Index A-I
Investment details
> Investors interested in the Franklin India Ultra Short Duration Fund (FIUSDF) have the opportunity to subscribe to the fund from August 19 until August 28. The units are priced at Rs 10 each.
> For fresh subscriptions, the minimum amount required is Rs 5,000.
> Additionally, investors can opt for investments through Systematic Investment Plans (SIPs) with a minimum starting amount of Rs 500.
> The launch of the FIUSDF signifies Franklin Templeton’s significant reentry into India’s debt market following the closure of six funds in April 2020 due to challenging economic conditions.
> This new fund represents a strategic pivot towards short-term fixed-income solutions within a high liquidity environment.
> Those contemplating this investment prospect should note that the FIUSDF presents a well-rounded strategy for managing short-term liquidity requirements with a conservative risk outlook. This positions the fund as a strong contender for fixed-income investors amid the present economic landscape.
Rahul Goswami, Chief Investment Officer and Managing Director for India Fixed Income at Franklin Templeton, will manage the FIUSDF alongwith portfolio manager Pallab Roy.
The fund is designed to cater to investors seeking short-term liquidity management or emergency funds, offering a conservative approach with a low interest rate and moderate credit risk.
Goswami said: “Fixed income should form a critical part of any investor’s portfolio. Historically in India, investors have relied on banking products for these needs. However, debt funds like FIUSDF aim to offer returns comparable to traditional savings instruments. We believe FIUSDF could be a valuable addition for those managing short-term liquidity or emergency funds.”
Avinash Satwalekar, President of Franklin Templeton India, highlighted that the FIUSDF will enhance the firm’s existing range of fixed-income products, targeting institutional and individual investors.
“FIUSDF leverages our extensive experience in managing funds through various market cycles, aiming for moderate credit risk and a balanced income strategy,” he said.