Franklin Templeton Mutual Fund Cuts Exposure To Vodafone Idea Papers

Troubled by exposure to huge statutory debts of Vodafone Idea, Franklin Templeton Mutual Fund lowers its debt exposure to the telecom major's papers to zero.

"The large quantum of AGR dues and the immediate payment timeline is resulting in significant uncertainty with respect to our exposure to Vodafone Idea... while relief avenues do exist, the situation remains unclear," the mutual fund house said.

The Asset Management Company's mark-to-market exposure caused a fall of 4-7 percent in its funds overnight. Franklin Templeton also restricted inflows into the affected schemes to Rs 2 lakh per day to prevent speculators from taking advantage of the drop in NAV (Net Asset Value) and any subsequent recovery in the debt.

Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Low Duration Fund, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund are the six funds that were affected by the decision. Their NAV came down between 4 to 7 percent after the move.

"A limit on purchases will help ensure that once clarity emerges and as resolution takes place, the interest of existing unitholders has not been significantly diluted in the interim through fresh purchase activity while limiting the inconvenience to retail investors," it added.

The fund house also said that it is closely tracking developments around the AGR issue and is also in touch with Vodafone Idea.

Other mutual funds with exposure to Vodafone Idea are Aditya Birla Sun Life Mutual Fund, UTI Mutual Fund and Nippon India Mutual Fund.