FT’s Loss-Making Investment In Edelweiss NCDs
Mutual Fund Critic
by
2y ago
On 29 September, there was a sharp rise in the NAVs of some of the 6 schemes of Franklin Templeton MF (FT) that are being wound up.  From what I can make out, in large part, this was on account of NCDs of Edelweiss Rural & Corporate Services Ltd. (ERCSL) being sold off.  These NCDs were due to mature in 2027, and had been sold off for a much higher amount than what they had been valued at, in the books.  Some investors that I know, saw it as a reason to be happy.  What most of them didn’t realize was that the jump in NAVs was, in effect, little more than a reversal of t ..read more
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BAF- Balanced Advantage Fakery
Mutual Fund Critic
by
2y ago
A first-time investor in Indian funds, who recently relocated from the US, reached out to me with this question: “How is a ‘balanced advantage fund’ different from a dynamic asset allocation fund?”    He expanded on that saying that until recently, he thought they were one and the same- that a ‘balanced advantage fund’ was just a desi term (his words) for a dynamic asset allocation fund.  But now, after reading something, he wasn’t so sure. The term ‘balanced advantage funds’- if I can actually call it a term- did indeed evolve as a sort of an Indianism for tactical (or dyn ..read more
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Important Announcement For Email Subscribers
Mutual Fund Critic
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2y ago
This communication is only for those who have subscribed to receive emails via the default option available on this blog.  If you’re not sure, please check the footnote of this email.  At the bottom-right, you should be able to see the words: ‘Email delivery powered by Google’. Google has announced that it will stop offering this service from 1 July.  If someone still wants to receive an email whenever there is a new post, they’ll have to sign up for a different service. Ideally, I would have liked to spare you the inconvenience, and do that on your behalf.  Unfortunately ..read more
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SEBI’s Uncovering Of The FT Liquidity Crisis
Mutual Fund Critic
by
2y ago
SEBI’s order against Franklin Templeton (FT) earlier this month, and the subsequent adjudication order make for a fascinating read.  SEBI has painstakingly compiled and analyzed FT’s actions and omissions, leading to the winding up of its 6 debt funds.  It establishes, with a wealth of evidence, that what happened was much more of FT’s own making than was generally understood, or FT cared to admit. While the orders offer a lot to take away and think about, in this post, I want to focus on some select findings on how FT’s choices contributed to the liquidity crisis.  Thanks to re ..read more
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The Franklin Templeton Tragedy- One Year On
Mutual Fund Critic
by
3y ago
It is the first anniversary of one of the darkest days in the history of mutual funds in India.  Whatever anyone else might say or think, in my eyes, what happened one year ago was a tragedy of such a magnitude that it put not just Franklin Templeton and SEBI, but the whole industry to shame.  But where exactly are we, one year on? When you redeem your investments in a debt fund, you can typically expect the money to be credited to your account the next business day.  It’s been one year now and investors in the 6 debt schemes of Franklin Templeton that were shut down are yet to ..read more
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About Target Maturity Debt Funds
Mutual Fund Critic
by
3y ago
This week will see the NFO of a target maturity debt fund, that has also been billed as India’s first debt index fund.  Open-end target maturity debt funds are a product category that merits serious consideration, and one that we should see a lot more of.  However, based on some of the commentary that I have seen in the media (mainstream and social), as well as what I’ve been hearing from advisors and investors, I feel that some of the wider understanding could be enhanced, and expectations tempered. In this post, I want to touch upon a couple of less-talked-about points. It might be ..read more
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How Should Affected FT Investors Vote?
Mutual Fund Critic
by
3y ago
This has reference to the forthcoming vote by investors in the six schemes that Franklin Templeton (FT) has proposed to wind up. There is a lot of publicly voiced advice on this, and almost all of what I have seen, is encouraging or urging a ‘Yes’ vote.  On its part, FT seems to also endorse that choice.   Presumably to make sure that the message is not lost, FT has framed the vote as being about an “orderly winding up”.  In my limited understanding of the law, the vote is supposed to be for approving the winding up.  Period.  Adding the prefix “orderly” adds an e ..read more
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Observations On Recent Fund Returns
Mutual Fund Critic
by
3y ago
The last ten months or so have been an extraordinary period for those whose fortunes are linked to the stock markets.  It isn’t often that frontline indices fall by close to 40% and then completely recover from there, all within such a short span of time.  If I am not mistaken, it was way back in 1990-91 that we last saw something quite like this.  But leave aside the rarity of that: there is a fair bit to take away from fund returns over these past ten months.  In this post I’d like to offer a few assorted observations that stood out for me.  Some are high-level obser ..read more
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Will Someone Please Think About The Affected FT Investors?
Mutual Fund Critic
by
3y ago
I just finished reading the Karnataka High Court judgement.  I am a slow reader, hence it took me a while.  Based on my limited grasp of legalese, the foremost thing that stood out for me is that this judgement has asserted the need for investors’ approval as a pre-requisite to the winding up of an open-end scheme.  Unfortunately, investors are not guaranteed the best, or even a good outcome.  And for some investors, there is also the possibility of more delay in their plight being resolved. The single most sacred right of an investor in an open-end fund is to be able to re ..read more
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The Lament Of A Mutual Fund Specialist
Mutual Fund Critic
by
3y ago
Guest Post For 22 years I have been helping investors design and nurture their portfolios using mutual fund schemes.  I have also suggested fixed deposits- in banks, with the Post Office and with companies.  However, most of my advice has centred on  mutual funds.  Mutual funds are a bona fide investment option- arguably the most versatile investment option there is, anywhere in the world.  I am registered with the Association of Mutual Funds in India (AMFI). Thus, I have always positioned myself as an investment advisor. But SEBI now has a problem with that because I ..read more
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