Franklin Templeton to launch India Banking & PSU Debt Fund

The Franklin India Banking & PSU Debt Fund aims to provide regular income to the investor, thus helping with wealth preservation

April 01, 2014 3:02 IST | India Infoline News Service
Franklin Templeton Investments (India) is launching a new open-end income fund called the Franklin India Banking & PSU Debt Fund (FIBPDF). This 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).
The New Fund Offer (NFO) will be open from April 02, 2014 to April 16, 2014 during which, units will be available at Rs. 10 per unit.
This Fund will follow an active investment strategy with primary focus on debt and money market instruments issued by Banks and PSUs. The principal aim will be to generate optimum 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 Public Sector Units (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, Mr Vivek Kudva, Managing Director, India and CEEMEA, Franklin Templeton Investments said, “India’s Corporate Bond market is just 14% of GDP compared 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, Mr Santosh Kamath, Chief Investment Officer – Fixed Income, Franklin Templeton Investments - India added, “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.”

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