Managing Mutual Fund Portfolio—the Franklin Templeton Credit Risk Fund Debacle

Ramabadran Uppily and M. S. Ramaratnam

FIIB Business Review, 2020, vol. 9, issue 4, 256-274

Abstract: Franklin Templeton started its Indian operations in the year 1996. On 24th April 2020 it made an announcement that it would be winding up Franklin India Credit Risk Fund and five other funds. This case is about the debacle of Franklin India Credit Risk Fund. Liquidity crisis in the debt market due to various events that happened in 2019, exposure towards debt instruments that turned risky (such as Yes Bank and Vodafone), reduction of inflows, redemption pressure, debt market becoming illiquid due to COVID-19 pandemic, were cited as some of the reasons for winding up of Franklin India Credit Risk Fund. The important thing to note is that when other credit risk funds have not taken the decision of winding up, why Franklin India Credit Risk Fund took this call? This case presents an opportunity to the students to analyse the factors that have contributed to the debacle and whether the decision taken is correct?

Keywords: Credit risk fund; credit rating; debt mutual fund; debt market; portfolio management (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:fbbsrw:v:9:y:2020:i:4:p:256-274

DOI: 10.1177/2319714520959526

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