The fund will follow an
active investment strategy of investing in debt and money market instruments
issued by banks and PSUs.
Franklin Templeton Mutual Fund
announced the launch of its new open-end income fund called the Franklin India
Banking & PSU Debt Fund (FIBPDF).
The fund seeks to provide regular
income through a portfolio of debt and money market instruments consisting
predominantly of securities issued by entities such as banks and public sector undertakings
(PSUs), said a press release issued by the fund house.
The New Fund
Offer (NFO) will be open from April 02, 2014 to April 16, 2014. The scheme will
re-open for subscription from April 28, 2014.
This fund
will follow an active investment strategy with primary focus on debt and money
market instruments issued by banks and PSUs. The fund seeks to generate accrual
return and minimize interest rate volatility in the portfolio. The fund
managers will seek to keep credit risk low by investing primarily in higher
quality instruments and may also seek exposure in gilt securities and state development
loans in order to maintain an optimum balance of yield, safety and liquidity.
In the
current environment, banks and PSUs dominate the corporate bond market in terms
of outstanding and primary issuances as well as volumes. The risks associated
with debt and money market securities issued by banks and PSUs are perceived to
be lower compared to other fixed income instruments due to regulatory
structures and ownership.
Speaking
about the rationale for launching the fund, Vivek Kudva, Managing Director, India and CEEMEA, Franklin Templeton
Investments said, “India’s corporate bond market is just 14% of
GDP compared to 40-70% in various developed countries. We believe there is huge
potential for growth in the domestic bond market, thus providing attractive
opportunities for the conservative, medium term investor. The Franklin India
Banking & PSU Debt Fund aims to provide regular income to the investor,
thus helping with wealth
preservation.”
“Indian investors are looking for
differentiated investment solutions in the fixed income space - this product
with its focus on higher quality instruments in the Banking & PSU segment,
caters to this need” Kudva
added.
Speaking about the fund’s strategy, Santosh Kamath, Chief Investment Officer – Fixed Income, Franklin Templeton Investments - India said, “We believe the fund’s investment strategy is well-suited to current market conditions. Our current analysis indicates that a portfolio focused on good quality investments, has the potential to deliver superior returns. The simple but unique portfolio structure of this fund will enable investors to enhance the return potential of their savings. Investments in this fund will be conservatively managed to reduce both credit and interest rate risk.”
