Mutual Fund News : Franklin Templeton Mutual Fund Changes Features of Franklin India Equity Fund

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Franklin Templeton Mutual Fund has changed the features of its Multi Cap scheme ‘Franklin India Equity Fund’.

In a communication sent by the fund house to its unitholders, it has stated a few fundamental changes in the scheme, which includes the change in its category and name.

Franklin India Equity Fund will be recategorized into the newly introduced Flexi cap fund category, and will be renamed as Franklin India Flexi Cap Fund’.

Franklin India Equity Fund is currently a multi-cap scheme investing across large cap, mid cap, and small cap stocks.

The SEBI circular dated September 11, 2020 put forth modifications to existing Multi-cap category asset allocation pattern as given below.

  • Minimum 75% allocation to equity and related instruments
  • Minimum 25% allocation each to large, mid and small cap companies.

Present structure of Franklin India Equity Fund has a predominant allocation to large cap segment. For the fund to comply with SEBI’s new allocation format, a significant increase in exposure to small cap segment is warranted.

Accordingly, the fund house has decided to recategorize Franklin India Equity Fund to the newly introduced Flexi cap fund category, and rename it as Franklin India Flexi Cap Fund’.

Under the new flexi cap category, the fund will be positioned as an open-ended dynamic equity scheme investing across large cap, mid cap, and small cap stocks in any proportion. The corpus of the scheme will be invested in equity and equity related and various fixed income securities. The scheme will move its assets between equity and fixed income securities depending on the view on these markets

It will hold 65% to 100% of its assets in equity and equity related instruments, whereas 0% to 35% in T-bills, G-secs& Money Market instruments.

The fund managers will follow active investment strategy taking defensive / aggressive postures depending on opportunities available at various points in time.

The change in features of the Scheme will be effective from January 29, 2021.

In terms of prevailing regulatory requirements, unitholders in the Scheme are given an option to exit at the prevailing Net Asset Value (NAV) without any exit load, in case they do not wish to continue in this Scheme in view of the change in the fundamental attributes. The period of this no load exit offer is from December 30, 2020 to January 28, 2021 (both days inclusive).

Unit holders who do not exercise the exit option on or before 3.00 p.m. on January 28, 2021 would be deemed to have consented to the proposed change.

However, the exit option without load will not be available to investments in the Scheme made on or after December 30, 2020.

Redemption from the scheme may have tax-implications for the unitholders and hence, they are advised to consult its advisor/ tax consultant prior to arriving at any decision.