Franklin Templeton MF credibly managed post-Covid debt crisis: Parekh

Franklin Templeton Mutual Funds (FT MF) deserves credit for the way they managed to tide over the debt crisis in the wake of Covid-19 in 2020, veteran banker Deepak Parekh said at an FT MF event in Mumbai on Friday.

FT MF had wound up six of its debt schemes in April 2020, citing redemption pressure amid a lack of liquidity in the bond market.

"It was a period of heightened uncertainty, in the midst of the lockdown and some of the debt funds were caught in a bind of heavy redemptions at a time of acute systemic tightness of liquidity. It was a choice of the devil and the deep blue sea -- fire sales would have eroded value for investors, but closing the funds with the intention of preserving value triggered further anxiety amongst unitholders," he said.

SBI MF, which was appointed by the Supreme Court to oversee the repayment to investors, recently announced the completion of the asset sale process for all six schemes. The liquidation resulted in unitholders receiving over 100 per cent of the AUM (assets under management) at the time of winding up.

While highlighting the MF industry's robust growth over the years, Parekh also stressed on the scope for “disproportionate growth”.

“While there has been robust growth in the industry, we still have a long way to go. India has more than 50 crore PAN card holders and more than 11 crore demat accounts, of which over 6-crore have been just in the last 3 years alone. In contrast, the Indian mutual fund industry has only reached about 4 crore investors, which points to a disproportionate headroom for growth," he noted.