Letter to Franklin Templeton President to the Investors
News Desk, News Nation 360 : Sanjay Sapre, President of Franklin Templeton has written a letter to their investors. The letter includes various points such as 1. Winding up of the schemes means that my money is lost : This is factually incorrect. They have communicated the reasons and market circumstances that led them to take this an extremely difficult decision which was taken purely to protect value for their investors, 2. The schemes invested in risky, unrated papers : The schemes followed a consistent investment strategy of investing in investment-grade papers across the credit rating spectrum, that is to say, from AAA through to A-rated papers. This strategy served the schemes and its investors well until recent times, 3. The liquidity problem is not related to the Covid-19 Pandemic : These schemes followed a consistent strategy of investing across the credit rating spectrum and have done so for many years, and across multiple market cycles. The schemes have been able to manage through these cycles and provide daily liquidity. Many of these schemes have been in existence for more than 10 years with a similar strategy. The current Covid-19 pandemic created a severe market dislocation particularly for the types of investments that these schemes hold, though the issue of lack of risk appetite, reduced volumes and illiquidity for corporate bonds was a broader market issue, 4. The schemes will not be able to return investor monies for an extended period of time : Each scheme has its own maturity prole and in general, shorter duration schemes will be able to return monies to investors faster. The schemes will receive regular coupon payments and maturities. In addition, the schemes will explore all opportunities to monetize the underlying assets in the portfolio, without resorting to any distress sales, such that it can return investor monies at the earliest possible time, 5. They should be redeeming their monies from all other Franklin Templeton schemes as these could also be wound up : The decision to wind up their suite of six yield-oriented schemes was an extremely difficult one and taken only to protect investor interest. It was not a situation in which they hoped to end themselves. They also recognize this has impacted liquidity for their investors but was necessary in order to preserve value for their unitholders, 6. Franklin Templeton is winding up its business in India : Franklin Templeton has been an early and patient investor in India. They have worked to build a long-term business in India over their 25+ year history here. This is also reinforced by the fact that over 33% of its global workforce is based in India. As affirmed by their global CEO, Jenny Johnson, Franklin Templeton’s commitment to India remains steadfast.
Report : Anustup Kundu