Franklin debt funds turn cash positive

As we all know that Franklin Templeton Mutual Fund had shut six of its schemes. As on April 23, 2020, these six debt funds that were worth Rs 26,000 crore were closed due to liquidity issues. Thus, two more out of six shut schemes from Franklin Templeton Mutual Fund have turned cash positive. So, now, a total of four out of six funds have become cash positive. All the money received would be used to pay back its unitholders.

Recently, Franklin India Low Duration Fund (FILDF) and Franklin India Credit Risk Fund (FICRF) repaid all the loans with 5 per cent and 1 per cent, respectively of their assets under management (AUM) in cash. Whereas, the cash position of Franklin India Ultra Short Term Bond Fund (FIUBF) and Franklin India Dynamic Accrual Fund (FIDA) surged to 31 per cent and 14 per cent, respectively of their AUM as on August 31, 2020.

Further, the fund house has informed its investors that as of August 31, 2020, the six shut schemes have received total cash flows of Rs 6,486 crore. And in the last 15 days i.e. from August 15 to August 31, the fund house received Rs 1,498 cashflows in those six schemes.

Unitholders of these six schemes are jammed and cannot redeem any money as the fund house is awaiting directions from Karnataka High Court. Hence, the faster the resolution takes place, the better it is for the unitholders as they can access their money. Also, as the e-voting and the unitholders' meeting stand suspended due to the pending case in Karnataka High Court, the fund house cannot distribute any money to its unitholders.