Franklin Templeton to launch fixed tenure fund - Series IV

Mumbai: Franklin Templeton Investments (India) is launching a new fund fixed tenure fund, called Franklin Templeton Fixed Tenure Fund - Series IV - 60 Months Plan (FTFTF - Series IV). It is a closed-end fund that seeks to provide investors steady returns, along with capital appreciation through equity exposure.

The new fund offer period will be from 12 January 2006, to 10 February  2006, and the allotment date will be 3 March 2006. Units will be available at Rs 10 (per unit) for cash during the New Fund Offer. The minimum investment amount is Rs 10,000 and no entry load. The exit load as a per cent of the NAV is CDSC (Redemption / Repurchase / Switch-out transactions (as % of NAV):

Redemption Period of (from the date of allotment)

Upto 12 months is 4 per cent; from 12 months up to 24 months, 3 per cent; from 24 months up to 36 months 2 per cent; from 36 months but up to 48 months 1 per cent; from 48 months to 54 months 0.5 per cent and nil on maturity.

"The traditional fixed income investment avenues available for Indian investors have been giving lower returns due to the low interest rate regime," says Sukumar Rajah, director and chief investments officer, equity. "At the same time, the volatility in the debt markets has resulted in investors looking for investment avenues that can deliver reasonable returns over the long term. Keeping in mind this need, we are launching the fourth fund under the FTFTF series. It is a unique product that blends stability of fixed income instruments with the potential of equities, and is ideal for investors who are looking for competitive returns as well as cope with rising inflation," Rajah adds.

Talking about the investment strategy of the fund, he added, "The fund would invest at least 70 per cent in debt instruments that are maturing in line with the duration of the fund, which will help in reducing interest rate risk. The balance 30 per cent will be invested in equities, which will be managed in line with Franklin Templeton's disciplined, time-tested and process driven investment philosophy. Given the strong fundamentals on the economic and corporate fronts, this marginal exposure to equities should help the portfolio in achieving higher risk-adjusted returns over the tenure of the fund."

Elaborating further, Sandeep Singh, SVP and national sales head, said, "In addition to the potential for capital appreciation, investors in this fund can also avail of tax benefits through indexation. Moreover, they have an option to generate liquidity if the need arises, to redeem in part or full on a half-yearly basis (subject to applicable charges). Apart from this, under the dividend option investors can choose to receive annual payouts. The fund is also suitable for NRI investors who are looking for an attractive long term investment avenue to park their IMD proceeds and also those who have been traditionally investing in RBI Relief bonds."

Franklin Templeton is one of the largest private sector fund houses in the country with over Rs 16, 656 crore of assets under management and manages a range of 34 of mutual funds.