Mutual funds have become a very critical aspect of the money market. As new investors start to make better use of their money, mutual funds represent a low-risk option for them. Mutual funds make it easier for investors to avoid the hassle of constantly looking for changes in the stock market, researching where to invest, and answering other questions of this kind.
Mutual funds act as financial intermediaries, where funds are managed by professional fund managers. Because mutual funds bring together a large pool of investors into a single pool, investors can achieve economies of scale.
Mutual funds are offered in the form of equity, debt or hybrid funds. One such fund house is Franklin Templeton. Here is a guide to investing in Franklin Templeton investment funds.
About Franklin Templeton
Franklin Templeton Asset Management India Pvt. Ltd. was founded in 1995 and is currently present in over 28 countries. In September 1996 it launched its first investment fund program – the Templeton India Growth Fund. Over the next two decades, the company experienced steady growth.
Anand Radhakrishnan is the Chief Investment Officer of Franklin Templeton and manages all equity-related funds. He has been active in the industry since 1994.
1. Assets Under Management (AUM)
The AUM is the measure of how many people have subscribed to the fund. The higher the AUM, the better. It does not reflect performance or return but is an indicator of investor confidence in the fund.
In March 2019, Franklin Templeton had an AUM of 118,912 rupees, one of the highest in India.
2. Tax Benefits
Under Section 80C of the Income Tax Act 1961, investments in mutual funds may provide several tax benefits. Franklin Templeton offers investors an Equity-Linked Savings Scheme (ELSS) fund called Franklin India Taxshield, in which you can take advantage of tax benefits by investing up to Rs. 1.5 lakhs per year.
How to invest in Franklin Templeton Mutual Funds?
To invest in Franklin Templeton funds, you must be KYC-compliant. Submit your application to the registrar or fund house, or register online.
Before you invest, consider your long-term and short-term goals, age, risk tolerance and the time you are willing to invest. After careful study, choose the plan that best suits you!
Schemes offered by Franklin Templeton
The company offers more than 35 mutual fund programs, which include both equity and debt as well as hybrid programs. Some of Franklin Templeton’s programs are as follows:
#1 Franklin India Ultra Short Bond Fund: This mutual fund program invests in a mix of short-term debt and other money market instruments. The asset allocation is 70.31% debt, 22.69% cash, and the remaining amount in others. At moderate risk, it has an annual return of 9%. The net asset value (i.e. the price at which units of investment funds are bought and sold) was recorded at Rs. 27.3163 in August 2019. The expense ratio (i.e. the percentage of funds spent on administrative purposes in managing your funds) is 0.44% – a healthy low for investors. This fund is managed by Santosh Kamath. The exit burden (i.e. the amount that the company charges investors for exiting a scheme) is NIL.
#2 Franklin India Low Term Fund: This is also primarily a leveraged fund with few investments in cash and others. The asset allocation mix is 73.06% debt, 21.23% cash, and 5.71% other investments. This system carries moderate risk while offering an annual return of 9.2%. The most recent NAV is Rs. 22.2726. The expense ratio for this Franklin Templeton fund is also on the low side at 0.51%. Santosh Kamath also manages this fund, with a 0.5% exit load within 3 months, and NIL thereafter.
#3 Franklin India Dynamic Accrual Fund: This program helps you to earn a regular income. It relies on the power of accumulation, where investors do not receive dividends but are offered increased capital growth instead. A large portion of this fund is invested in debt securities/fixed income securities. These also have moderate risk and an annualized return of 8.4%. With a current NAV of Rs. 68.0473, the expense ratio for this system is 1.77%, which is within the normal range. The exit load fluctuates within a period of 48 months, after which it is at NIL.
#4 Franklin India Debt Hybrid Fund: The objective of this fund is to provide you with the benefits of high quality, steady income while allowing a degree of exposure to equities. 64.76% of the investments are debt, 20.33% equity, and 9.14% cash. The associated risk is moderate with an annualized return of 9.6%. The expense ratio is 2.28% and the exit load is 1% for up to one year and NIL thereafter. The manager of this fund is Krishna Natarajan.
#5 Franklin India Equity Hybrid Fund: This fund is a balanced fund with a certain propensity for equities. It aims to provide you with a good current income and some capital appreciation by investing in fixed-income securities. 69.5% of this fund is invested in equities, 28.29% in debt, and the rest in others. The risk involved is moderately high, but it has an annualized return of 13.2%. The expense ratio for this fund is 2.48%. This fund is managed by Krishna Natarajan.
There are also several other funds with different investment allocations that you can select according to your investment objectives. Needless to say, Franklin Templeton’s funds have performed well in recent years. If you are ready to start investing, Franklin Templeton’s mutual fund programs are an ideal starting point. If you are an experienced investor looking to diversify, Franklin Templeton’s mutual fund programs should be on your radar here as well.