Franklin Templeton today announced the winding down of SIX of its Debt Funds

*What just happened to Franklin Templeton Funds?*

First - Franklin Templeton today announced the winding down of SIX of its Debt Funds (which had credit risk)

This is effective tomorrow i.e. 24th April 2020

This is an unprecedented move

*Which are these Funds?*

These Funds are

•Franklin Low Duration

•Franklin  Dynamic Accrual

•Franklin Credit Risk Fund 

•Franklin Short Term Income

•Franklin Ultra Short Bond

•Franklin  Income Opps Fund

All these funds have been wind down with immediate effect

*What happens to my investments in this wind-down?* *They will return my money?*

Ans: This wind-down is similar to a lock-down

These schemes will not allow any further transactions, no purchases, no redemptions

It's like the entire scheme becomes a segregated portfolio

*Whoa! What do you mean?  Tell me more clearly*

These six schemes put together as of date have an AUM of Rs. 28,000 cr. This entire AUM is now stuck as it is. You cannot redeem

*What do u mean, I cannot redeem?*

Simply put, you cannot withdraw any monies

*Common don't joke, my money is stuck till how long?*

Ans: It's not a joke.  Here is the formal notice from Franklin Templeton👇

*So u mean, my money is gone? They will never open these schemes*

Ans: Yes, the schemes are wound down.  They will never open again

It will work like a segregated portfolio i.e. the day they get any interest,, maturity from any of the holdings it will distributed to all 

*So I will get my money back soon?*

Ans: As and when the underlying portfolio instruments mature or the scheme receives the money back (in case interest or defaults etc) they will pay it back to you.

Key Highlights of RBI Press Conference

•The LCR requirement of scheduled commercial banks being brought down from 100 percent to *80 percent* with immediate effect.

•Period of resolution plan for *NPAs* to be *extended by 90 days*

•Clashflow of households and businesses affected. We recognise that COVID-19 has challenged the ability of borrowers to repay. Thus the *NPA count shall not* include the 90-day moratorium.

•Reverse repo rate is being reduced by *25 bps from 4% to 3.75%* under Liquidity adjustment facility (LAF)

•RBI undertook three long-term repo operations (TLTRO) to ease liquidity constraints. The *TLTRO option of Rs 25000 crore* is to be conducted today (April 17). In response to these auctions, financial conditions have eased considerably and activity in *corporate bond market has picked up.*  *Redemption pressure faced by mutual funds* have also eased. RBI has been constantly monitoring situation and in our effort to see financial system is fully functional, we will announce additional measures.

​•Pre-monsoon kharif sowing has been aggressive. Paddy is up by 37 percent in April vs last year. On April 15, the Indian Meteorogical Department (IMD) has forecast a *Normal* southwest monsoon, Rainfall expected at 100 percent of long term average.

•RBI has injected *3.2 percent* of GDP into the economy to tackle liquidity situation since February 6 to March 27.

•India expected to show a *sharp turnaround post the COVID-19 crisis.* India expected to post a sharp turnaround in FY22 with 7.4 percent growth as per IMF.

Asset Allocation

Industry experts believe that 90 percent of the performance of a portfolio is linked to asset allocation. So only if you have allocated your assets in the right way depending on your risk appetite and goals would you be able to build a good mutual fund portfolio. Asset allocation acts like fuel towards your long-term investments and returns.

Allocating your assets is a simple process where you can spread your investments across various asset categories such as equity mutual funds, debt mutual funds and cash. The more you diversify across various assets the better you’d be able to cushion your capital against the markets when they fall. Allocating assets would depend on your age, lifestyle, goals and risk-taking appetite. Let’s say you are a young investor. Since you have time on your side, you should look to invest more than 70 percent of your capital in equity and leave the remaining 30 percent in debt. Also as you near your goal or retirement, you should gradually move your investments from equity to debt. This would ensure your capital is protected in case the markets are volatile at the time you decide to remove your money. It is advisable for young investors to put their capital in equity if they want big returns.

Sometimes the macros look weak and the stock market indices are seen at new highs, so it is important to spread across your investments in order to protect your capital from market risks. By allocating assets across various segments, you can minimise volatility and maximise profits. Allocating your assets helps you in simplifying both your long-term and short-term goals. It is advisable you should allocate your assets for short-term goals in investments which have fewer risks. Once you have allocated your assets across various sectors it is important you track it regularly. Here you can minimise volatility and maximise profits. Many well-known wealth managers believe asset allocation is important to the success of any financial plan. It is important you review it once a quarter and depending on how the market has performed if it moves up or down by 10 percent of the target then it is time you should rebalance your portfolio to ensure the risk is taken care of.

Market News

• OPEC – Russia Agree to Cut Down Crude Production

OPEC has finally agreed to reduce oil production to 9.7 million barrels a day. This will allow the crude oil price to stabilize.

Last month, the falling price of crude oil was a major reason for the markets to fall. The reducing demand of crude oil due to the spread of coronavirus caused a drop in the price of crude oil. 

This deal should stabilize the price of crude oil.

• China’s Central Bank Increases Stake in HDFC 

It came to light from shareholding disclosures that People’s Bank of China has increased its stake in HDFC to 1.01%.

The central bank of China already had a stake of 0.8% as of March 2019.

We know the times are tough and the situation tense. It is natural to be apprehensive about the state of your investments and confused about your finances. But we won’t let you struggle alone.

Lockdown & Health Ministry Updates

As we approach the end of India’s 21-day lockdown on 14th April, it is becoming clear that many states, if not all, will have to continue with the lockdown for some more time.

Many had voiced concerns that 21 days of lockdown isn’t enough for many states.

Odisha and Punjab have already announced an extension of their lockdown till the end of April.

In a press conference on Friday, the health ministry maintained that they still see no proof of community transmission in India.

The ministry also assured that India had 3.28 crores tablets of the key drug hydroxychloroquine in stock and that exporting to other nations like the US and other nations was not compromising our preparedness.

Hydroxychloroquine is a drug used against malaria which has shown great promise against SARS-Cov-2.

The markets, on the other hand, are going through very interesting times.

This week saw the markets gain nearly 9% in a single day - the highest single-day rise in Sensex since 2009.

HUL - Hindustan Unilever Ltd overtook HDFC Bank to become the 3rd largest company in India.

AMFI data seems to suggest SIP investors are continuing their SIPs - monthly SIP values throughout this fiscal year have been between Rs 8,100 crores and Rs 8,600 crores with March seeing inflows of Rs 8,641 crores.

The number of new SIP folios also jumped by 2.47 lakh in March totaling 3.12 crores.