 "Franklin Templeton")
In an effort to rebuild investor trust, Franklin Templeton Asset Management Company (AMC) has announced a reshuffle of its fixed-income investment team. The AMC also plans to venture into the alternatives business, beginning with private credit.
Rahul Goswami, previously at the helm of debt investments at ICICI Prudential AMC, has been appointed chief investment officer (CIO) & managing director (MD) – Fixed Income, according to a Franklin Templeton press release.
Goswami succeeds Santosh Kamath, who will now lead the newly established alternatives business at the fund house.
This strategic appointment aims to overcome the company's past challenges.
In April 2020, the fund house unexpectedly closed six debt schemes, citing liquidity crisis and redemption pressures amid the COVID-19 pandemic.
Franklin Templeton has since stated that five of the six schemes have liquidated all performing assets and extinguished all units, with only one scheme — the Short Term Income Plan — still owing money to investors.
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The fund house has paid out more than 107 per cent of the total assets under management (AUM) of the funds at the time they were frozen for redemptions.
"Both investors and distributors have recognised that the decision to wind up was made to preserve value and was in the best interest of unit holders. All six funds have returned over 100 per cent of the reported AUM value at the time of the winding up," Franklin AMC reported.
The fixed income assets currently managed by the fund house represent only a fraction of the total in March 2020. Excluding liquid, the average debt fund AUM of Franklin Templeton stood at Rs 2,565 crore, compared to Rs 45,660 crore in the quarter ending March 2020.
Franklin Templeton aims to rejuvenate its presence in the debt space with Goswami leading the charge.
"We're thrilled to welcome Goswami's substantial experience and impressive industry track record to Franklin Templeton as we embark on a new growth phase in India. Goswami will collaborate closely with me to develop our India fixed-income strategy. I'm confident this strategic addition to our India leadership team will provide exceptional value to our clients in the fixed income space," said Avinash Satwalekar, president of Franklin Templeton – India.
However, the appeal of debt mutual funds has waned following the government's removal of its tax advantage.
The fund managers' aversion to credit risk and subsequently lower returns have further decreased their attractiveness to investors.
Medium-to-long-term fixed-income schemes have struggled to attract inflows recently.
Several affluent investors have migrated to private credit funds offered by alternative investment funds (AIFs) — a sector the US-based asset manager is keen to explore.
"The India alternatives business, led by Kamath, will initially focus on alternative credit, encompassing listed and unlisted corporate bonds and structured credit. This will enhance Franklin Templeton's global alternatives capabilities and allow for a broader range of solutions to meet the evolving needs of clients in India," the fund house said.
