InvestorQ : How should investors react to the Templeton NFO success?
Mitali Bhutta made post

How should investors react to the Templeton NFO success?

4 weeks ago

Recently, Templeton saw successful closure of its Balanced Advantage Fund NFO that collected over Rs800 crore. It raises a key question, is the Indian investor being just too forgetting and forgiving after the fiasco that Templeton enacted in April 2020? Just last year, SEBI had passed a detailed order against senior personnel of Templeton AMC, wherein it had put the blame squarely on the managers. It had also penalized the CEO and other senior managers for allowing the fiasco to happen absolutely under their nose.

However, it was not just ignoring the signals but gaining from information that had angered SEBI. In fact, the top management of Templeton India had gained by trading out of the units on the basis of inside information they had about the quality of the bonds held in the fund portfolio. This was just ahead of the freeze. SEBI had also put a ban on NFO issues by Templeton, which had been diluted by SAT. That was the main reasons why the NFO was allowed. Knowing the background, SAT should have been a little more cautious.

What should investors do? Do not get carried away because a leopard hardly changes it spots so easily. Don’t try to chase returns in Templeton MF. When a fiasco of the size of Templeton MF happens, it is a case of checks and balances missing or being deliberately ignored. Both are not ideal situations to be in. BAF is not just a debt *** equity product, but a product where manager has lot of discretion. That is where the whole problem started last time at Templeton MF. Investors must rather be safe than sorry.