Franklin Templeton Asset Management

About

Franklin Templeton’s India office was set up in 1996 as Templeton Asset Management India Pvt. Limited. It flagged off the mutual fund business with the launch of Templeton India Growth Fund in September 1996.

Franklin Templeton Investments is a global investment firm and holding company that is headquartered in New York City, New York and was founded in 1947 by Rupert H. Johnson, Sr. The company offers investors investment solutions for those people looking to invest for individual retirement, education savings, small business retirement plans, and charitable giving. They offer several investment vehicles which include mutual funds, ETF’s, separately managed accounts, and private funds.

Franklin Templeton’s association with India dates back to over 2 decades as an investor. As part of the group’s major thrust on investing in markets around the world, the India office was set up in 1996 as Templeton Asset Management India Pvt. Limited. It flagged off the mutual fund business with the launch of Templeton India Growth Fund in September 1996, and since then the business has grown at a steady pace. 

Key staff

Avinash Satwalekar is the President of Franklin Templeton Asset Management effective June 2022. He was the CEO and country head for Franklin Templeton Malaysia. He joined Franklin Templeton in 1996. Since then he has held various positions in the organisation like  he was a vice president, portfolio manager and research analyst for Franklin Portfolio Advisors (FPA), a division of FTPA, prior to that he was the vice president and research analyst for Franklin Equity Group.

Sanjay Sapre- ex President Qualifications: M.B.A. from Ohio University, United States, Experience 21 years

Anand Radhakrishnan is chief investment officer for Franklin Equity – India, Franklin Templeton Asset Management (India) Pvt Ltd. Mr. Radhakrishnan is responsible for overseeing all the local equity funds. His responsibility includes mentoring all the portfolio managers and also acting as portfolio manager for some key products. He manages Franklin India Bluechip Fund, Franklin India Prima Plus, and Franklin India Taxshield, Franklin India Infotech Fund, and equity portfolio of all hybrid funds. Mr. Radhakrishnan has been in the investment management industry since 1994. Mr. Radhakrishnan holds a postgraduate diploma in management from Indian Institute of Management, Ahmedabad, and a bachelor of technology degree with a specialization in chemical engineering from Anna University, Chennai. He is a Chartered Financial Analyst (CFA) charterholder.

Sukumar Rajah is the Managing Director and Chief Investment Officer (Asian Equity) for Franklin Templeton’s Local Asset Management Group. Based in Singapore, Mr. Rajah is responsible for overseeing regional and multi-country products, investment process development and enhancements in Asia. He is responsible for overseeing the India Equity group and is the lead portfolio manager of India-related funds, institutional accounts distributed outside of India and the Franklin Asian Flexcap Fund. He also plays a key role in developing synergies between the local asset management groups throughout Asia and the region’s long-term equity product strategy.

Murali Yerram is a senior manager and senior research analyst for Franklin Templeton India AMC Ltd. He is responsible for providing research on the banking and financial services sectors. Prior to joining Franklin Templeton Investments, Mr. Yerram worked in the software services industry for Deloitte Consulting, Infosys Technologies and Satyam Computer Services for seven years. Mr. Yerram holds an M.B.A. in finance and accounting from The Wharton School of the University of Pennsylvania and a bachelor degree in electrical and electronics engineering from Jawaharlal Nehru Technological University, Hyderabad.

Investment Philosophy (for firm)

The key guiding principle to our investment philosophy is – maximise the risk- adjusted returns for our investors in the respective asset classes, and create wealth for them over the long-term.

Equity

While broad economy and sector trends serve as a broad guideline, Franklin Templeton portfolio managers are essentially ‘bottom-up’ investors, focusing more on individual stocks and their potential to deliver long term capital appreciation. The emphasis is more on in-house research and looking beyond published reports, as often there is more to a company’s story than numbers alone reveal. While quantitative analysis using proprietary research model serves as a first stage filter, the research team and portfolio managers speak with key management and observe operations onsite to get a meaningful insight into a company’s ability to translate vision into reality

The investment strategy on the website is only available for Indian equity and not debt.

 

Franklin India Equity : 

  • They seek to capture the growth potential of India’s economy by employing a bottom-up security selection process based on in-depth company research.
  • Through a long-term oriented approach, we focus on identifying high-quality companies that can achieve sustainable growth over time with reasonable valuations.
  • They believe that the quality and thoroughness of their research combined with their flexible yet disciplined approach to investing in Indian equities offer the potential for strong returns in any investment climate.

Investment Process:

  • Develop Universe: Shortlist companies from the universe of 5,500 companies; identify companies with sound business models, strong growth opportunities, sustainable competitive advantages, and quality management.
  • Fundamental Research: 360-degree, in-depth analysis based on regular interactions with management, employees, customers, competitors and independent industry professionals as well as study reports/news; financial analysis and forecasts.
  • Valuations: Flexible approach, using suitable valuation tools depending on the industry and market situation; focus on the long-term strategic view in the valuation approach.
  • Stock Recommendations: Conduct rigorous team discussion and debate between analysts and managers on potential companies entry onto a “buy”, “hold” or “sell” list, based on growth, quality and valuation.
  • Portfolio Construction: Model portfolio constructed from the analysts’ “buy” and “hold” lists; final portfolio security sizing determined by stock conviction as well as risk alignment; Portfolio manager has discretion over exposure to stocks outside the model portfolio.

Media

Franklin Templeton case: SC asks SBI Mutual Fund to hold next tranche of payments after distributor body moves court, moneycontrol, 14th April 2022

https://www.moneycontrol.com/news/business/personal-finance/franklin-templeton-case-sc-asks-sbi-mutual-fund-not-to-disburse-next-tranche-of-payments-after-distributor-body-moves-court-8357261.html

The Supreme Court (SC) has directed SBI Mutual Fund to hold back the next tranche of payments to investors of Franklin Templeton Mutual Fund for the time being, after mutual fund distributors’ body – Foundation of Independent Financial Advisors (FIFA) – moved the court seeking payment of distributor commissions.

FIFA has approached the supreme court as no provisions have been made for protecting the interests of the distributors. Many distributors feel that they have lost a large part of their income due to the wind up of the 6 mutual funds.

Franklin Templeton’s shut schemes have Rs 231 crore cash for distribution to unit holders: Sapre, The Economic Times, 4thApril 2022

https://economictimes.indiatimes.com/mf/mf-news/franklin-templetons-shut-schemes-have-rs-231-cr-cash-for-distribution-to-unitholders-sapre/articleshow/90646054.cms

The fund house has so far distributed Rs 26,098 crore to unit holders in eight tranches from April 2021 to November 2021. Sapre assured investors that efforts to monetize the remaining securities continue unabated and the AMC continues to support the ongoing liquidation process by the court-appointed liquidator.

Franklin Templeton-appoints Avinash Satwalekar as president of India business, Mint, 24th Feb 2022

https://www.livemint.com/mutual-fund/mf-news/franklin-templeton-appoints-avinash-satwalekar-as-president-of-india-business-11645683049109.html

Avinash Satwalekar would be the new president of Franklin Templeton Asset Management from 1st June 2022. Sanjay Sapre would head the firm’s consumer oriented capabilities globally, with a special emphasis on helping distribution partners grow their digital propositions.

Relief for Franklin Templeton unitholders, SC asks SBI Mutual Funds to distribute funds for 6 schemes, ettimes now, 2nd February 2021

https://www.timesnownews.com/business-economy/companies/article/relief-for-franklin-templeton-unitholders-sc-asks-sbi-mutual-funds-to-distribute-funds-for-6-schemes/715189

The Supreme court has asked SBI Mutual Fund to distribute money to the unitholders for the 6 funds. SBI Mutual Funds to distribute Rs. 9122 cr to over 3 lakh Franklin Templeton investors

Franklin Templeton Closure: What Went Wrong, How It Will Impact Investors And Other Questions Answered, cnbc tv18, 24th April 2020

https://www.cnbctv18.com/personal-finance/franklin-templeton-closure-what-went-wrong-how-it-will-impact-investors-and-other-questions-answered-5765921.htm

Franklin Templeton decided to close 6 of its debt schemes in India citing severe redemption pressure and illiquidity in the bond market amid the covid-19 crises.  It is expected that the Franklin Templeton would repay the investors when the macro-economic situation improves. Investors would not be allowed to withdraw from the schemes till the situation improves.

Media updated by – Devasri Davey, May 2022

Franklin Templeton India winds up six credit funds amid COVID-19 crisis, Media platform name, Date- 24 April 2020 

Link to media- https://www.cnbctv18.com/market/stocks/franklin-templeton-india-shuts-six-credit-funds-amid-covid-19-crisis-5764171.htm

Franklin Templeton Mutual Fund announced the closure of its six credit funds due to liquidity issues amid the coronavirus crisis. The funds that will be shut are Franklin India Low Duration Fund, Ultra Short Bond Fund, Short Term Income Plan, Credit Risk Fund, Dynamic Accrual Fund, Income Opportunities Fund, the company said in a statement. They are shutting it down after seeing a lot of redemption because of liquidity pressure and of COVID-19

The interview of Mr. Anand Radhakrishnan by CNBC TV18 on Youtube, October,2015.

The link to the interview : https://www.youtube.com/watch?v=F35Ta5Pdb_Y

  • John Templeton was a different type of investor, wasn’t he?

Anand replies, he was a well-known value picker. He was more of a behaviour based value picker. Templeton’s personal philosophy was to buy stocks when others are afraid to buy and sell when others are greedy for money. He believed that bull markets are formed on depth of despair. Franklin has a philosophy that when they make an acquisition, they allow the team to follow their approach. They don’t force to implement their culture. Franklin Templeton’s philosophy as a whole is that it allows the investment managers and the fund manager to follow their own investment style.

  • You manage thousands of crores, how do you fish in these seas, how do you pick stocks?

Anand answers, we look at the current growth and the growth potential of the company. For example a company not going so well but does not require too much of capital to grow and under-utilizing the capacity. Not excessively leveraged balance sheet but we don’t mind a bit of a leverage, because if things grow in the future we will get good returns. The balance sheet should not be pristine clean because pristine clean balance sheets are overrated. It should be reasonably clean.

  • According to you, if the world has a global meltdown, will the repeat of 2008 happen?

He answers, the world is awash with the liquidity, so there is a risk with global equity markets, but in case of India there is comparatively less risk than what it was in 2008. The reason being in 2007 the earning were at the peak, economic growth, valuations, Sensex were at all-time high. It was a synchronized growth back then, and a synchronized fall.

  • What is your selling strategy?

He says, we can be early in selling a stock but we will never be late. We have a disciplined investment approach. There might be shares which climb up after we sell. Therefore it might not work in one place but on average it works fantastically.

  • What is your investment style?

When the company is better than what people are thinking it to be is an opportunity. The main idea is if the company is coming to be better than what the market’s understanding of that company. If the market thinks it’s a good company but I think it to be a superlative company then I put my bet on it.

He says, “Wherever there is a deviant view, there is a buying opportunity.” 

  • What practical advice do you give a young student who wants to be a fund manager?

He says, start investing by yourself. It will teach you more than what books can.

An interview from valuesearchonline.com, March, 2017.

https://www.valueresearchonline.com/stories/33370/a-great-track-record-doesn-t-happen-by-accident/

  • Franklin Templeton AMC has had a very stable investment team in an industry which sees considerable churn. What in your view contributes to this?

I think the congruence of the fund manager’s personal-investment philosophy, style and value systems with the fund house is essential for anyone to stick around for a long time. We have seen that with our investment team. Where an individual progresses and also finds his investment philosophy in alignment with the firm’s, he or she generally doesn’t leave that easily.Two, given that FT is a global investment-management firm, which is sharply focused on the mutual fund business, there are a lot of global resources and bandwidth available. In our firm, the needs of the investment team are met with priority.Three, we have a fair system of rewards linked to performance. FT usually figures in the top quartile in the industry in terms of compensation, though it may not be the highest paymaster.

  • Do you prefer nurturing in-house fund managers as compared to lateral recruitments?

We have a large research team and we do consciously look for our analysts to scale up to become fund managers. We have always been able to find people who are willing and able to scale up.We have recently recruited a portfolio manager from the life-insurance industry who matched our philosophy and style expectations, but we don’t find those matches very often. The familiarity of in-house talent is hence an advantage.

  • To what extent is performance of a scheme determined by the fund manager? Can this be automated by a process?

Not really. There are many behavioural aspects to investing which differ from individual to individual. Every individual brings a different approach and a world view to the schemes she manages.It is this world view which decides the choice of stocks, the weightages and the timing of entry and exit. Some managers may also be more prone to churning the portfolio than others. Manager’s assessments of their own risk perception also matters.I would say portfolios will change with fund-manager changes. What AMCs aim to achieve is continuity in product construct and mandate, say in terms of the large-cap/mid-cap mix, buy-and-hold versus churn, etc. But within this framework, one fund manager’s choices will certainly differ from another’s. What should not change is the style or core approach. Investors are buying a fund based on this promise.

MMI Interview with Harshendu Bindal, previous CEO

Summary – to be done

MMI Interview with Anand, dated 2014

Summary to be done

Analyst questions

  • Can you explain your investment philosophy in detail?
  • In the description of your Franklin build India fund it is mentioned that it will invest in companies involved in infrastructure related activities, if it’s true, then how will you explain the high funds exposure in banking sector?  (which is 27.08% as on 31/05/2020)
  • In almost every fund, we can see that major percentage around (15-30 %) of the funds is invested in banking sector, why?
  • As we know that you have to wind up 6 of your debt funds scheme recently, what went wrong with the funds? Why this extreme measure was required?
  • Do you think this will affect the other funds of the company? 

  • Can you describe the company’s investment philosophy?
  • The Singapore website states about ESG investing,it says nothing on the indian website, so is it followed in India as well?
  • You had mentioned in one of your interviews that if a global meltdown occurs, India will not be as affected as other countries.What do you have to say after March 2020?
  • After the six Debt schemes winding up in this pandemic, what measures or steps has the company taken to restore the trust of the hesitant investors?

Prepared by- Meet Joshi

Date- 20th May, 2021

Authors

,
Share:

You must be logged in to post a comment.