On Friday, Franklin Templeton India winding down six debt schemes, the Association of Mutual Funds in India (AMFI) rushed to assure investors that their money in debt schemes is safe. ‘The action taken by the particular AMC (asset management company) is limited to the six specific credit risk fixed income schemes managed by the said AMC due to the illiquidity of their portfolios. The assets under management (AUM) of these six schemes constitute less than 1.4 per cent of the Indian Mutual Fund Industry’s aggregate AUM as on March 31, 2020,’ said AMFI in a press statement.
Liquidity, maturity profile and credit quality for debt funds are appropriate for day- to-day smooth operations, AMFI added.
Franklin Templeton Mutual Fund in India on Thursday announced shutting down of six of its yield-oriented managed credit funds with total assets under management of Rs 25,856 crore due to severe illiquidity and redemption pressures caused by the covid-19 pandemic.
Nilesh Shah, chairman, AMFI, said there was ample liquidity for good quality papers. The banking liquidity is in excess of Rs 700,00 crore and Long Term Repo Operations by the RBI and expectation of rate cuts ‘will keep the bond market liquid.’ ‘We had discussions at board and member level at AMFI and have been assured that there is currently no borrowing by any other debt scheme. Absence of borrowing should ensure that all other debt mutual fund schemes are safe and investors should not be worried about their investments,’ Shah added.
Also, AMFI has assured of the quality of credit risk funds which have an AUM of about Rs 50,000 crore. ‘Most credit risk funds have pretty good credit quality and sufficient liquidity in today’s challenging times and continue to remain an attractive investment option for investors,’ said NS Venkatesh, chief executive, AMFI.
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