Debt Mutual Fund Schemes Show Negative Returns as Franklin Writes off Vodafone Idea Debt Papers
Last Updated : Jan. 22, 2020, 11:55 a.m.
Franklin Templeton has written down debt papers worth ₹2,050 crores it got from the crisis-ridden telecom giant Vodafone Idea. The movement comes on the backdrop of the Supreme Court order on Adjusted Gross Revenue (AGR) dues that went against the telecom major. As a result, a few of Franklin debt funds have incurred negative returns for the investors. So, which are those funds that have made life difficult for investors? Let’s find out here.
Franklin Debt Mutual Funds That Show Negative/Low Returns
Franklin Debt Mutual Funds | Last 6-Month Return | Last 1-year Return |
|---|---|---|
| Franklin India Low Duration Fund | -5.42% | -1.99% |
| Franklin India Income Opportunities Fund | -3.37% | 0.06% |
| Franklin India Credit Risk Fund | -3.38% | -1.04% |
| Franklin India Dynamic Accrual Fund | -1.83% | 1.78% |
Even Aditya Birla Sun Life Mutual Fund and Nippon India Mutual Fund have debt exposure of ₹500 crores and ₹225 crores, respectively, in the beleaguered telecom group. This has led to a situation where the debt funds of Aditya Birla and Nippon have had to face negative return issues.
Other Debt Mutual Funds That are Facing Crisis
| Debt Mutual Funds | Last 6-Month Return | Last 1-year Return |
|---|---|---|
| Aditya Birla Sun Life Dynamic Bond Fund | -4.99% | -0.11% |
| Aditya Birla Sun Life Medium Term Plan | -6.67% | -4.68% |
| Nippon India Strategic Debt Fund | -0.33% | -3.76% |
| Nippon India Credit Risk Fund | 1.21% | 1.43% |
Now, How Should You Go on from Here?
Yes, there are negative returns, but don’t press the panic button yet. So, if you have invested in these funds, just hold on to your investments till the effect of the correction is over. You just need to check the portfolio of your funds thoroughly. See how much exposure your fund has in the debt papers of Vodafone Idea and other troubled entities. If the exposure accounts for 10% and above, you would better shift your investments to some other funds with exposure to the debt papers of financially sound companies. To judge which is financially sound and which is not can be gauged by looking at their balance sheets for the last 1-2 fiscals.
Which Debt Mutual Funds Have Shone the Most in Recent Times?
Almost every category of debt funds is facing tough times at the back of debt exposure to Vodafone Idea, but liquid funds have performed better. Check out some of the liquid funds you can look to invest in.
| Debt Mutual Funds | Last 6-Month Return | Last 1-year Return | Last 5-year Return | Last 10-year Return |
|---|---|---|---|---|
| Mirae Asset Cash Management Fund | 2.79% | 6.47% | 7.08% | 7.16% |
| Baroda Liquid Fund | 2.84% | 6.50% | 7.34% | 7.94% |
| Tata Liquid Fund | 2.78% | 6.45% | 7.30% | 7.90% |
Note – Data sourced from Value Research as on Jan 17, 2020.
Disclaimer – “Mutual fund investments are subject to market risks. Please read the scheme related documents carefully before investing”.