When can we expect the money from Franklin India Dynamic Accrual Fund? What are the other funds about which, we must be careful?
Franklin Templeton has come up with estimates that are reasonably conservative in the sense that the company has just looked at the redemption timeline of the underlying investments and prepared the estimates. Franklin India Dynamic Accrual Fund has a relatively long-drawn maturity profile.
In the last few weeks, the company has had a few developments. One, it has appointed Kotak Mahindra Bank to supervise its trustees in the speedy liquidation of the underlying portfolio. Second is that although it has prepared a timeline based on the maturity profile, it has given a rider that it is committed towards investors and will try a faster liquidation than its normal scheduled maturity profile. The company has sent an email to each investor. For more details, you can check the email communication. Also, it is periodically informing about each development in the winding-up schemes.
Given the kind of public pressure being built-in, matters being taken up by the regulator and the AMC stating that it would work hard to repay as fast as possible, I am hopeful that this will happen.
But my concerns are the further weakening of the economy, the lack of liquidity amid the frozen bond market and risk aversion that we are seeing in the market. So, in this sense, it is a difficult situation and thus, it is tough to sell those investments in this environment. The moment we have little normalcy, I think things will get easier.
Many other funds are facing such issues - credit-risk funds have been seeing massive redemptions and that itself is a problem. Just to err on the side of caution, make sure to entrust your primary or substantial investment in ultra-safe investments. Get into investments that may give you a lower return but the one that is highly safe. And the safe island in the debt fund domain, in my opinion, are high quality short-duration, liquid and overnight funds.