Hard times teach valuable lessons! While the Franklin Templeton (FT) Mutual Fund’s decision to wind up six of its schemes raise questions on the role of regulators, it also has much to teach the investors. The fund house recently closed six of its schemes citing severe redemption pressure and illiquidity in the bond markets amid the ongoing coronavirus crisis.

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The funds which have been shut are Franklin India Low Duration Fund, Ultra Short Bond Fund, Short Term Income Plan, Credit Risk Fund, Dynamic Accrual Fund and Income Opportunities Fund. The fund house maintains that in this scenario, this is the best possible way to safeguard the interest of exiting investors.

Here are 3 lessons investors can learn from the entire Franklin Templeton fiasco:

Never Chase Returns Blindly

While investing in debt mutual funds, investors generally look for higher returns. On this, experts say that return-chasing should be considered carefully. The perspective of the debt mutual fund should be studied carefully.

"Investors should identify the financial goals and invest accordingly. One can never judge what future holds and mutual funds are anyways subject to market risks," says Atul Shinghal, founder and CEO, Scripbox - an investment platform.

(Also read: What went wrong with Franklin, how it will impact investors and other questions answered)

Look At The Risk Associated

If investors have the expertise and knowledge, they should look at the risk associated with any investment before starting.

"Review the risk profile periodically. In case, investors don’t have the expertise, it’s always advisable to take professional help before investing," explains Shinghal.

(Also read: Looking to open a mutual fund online? Keep these things in mind)

Gather All The Information Related To The Fund

Like everything else, the bad times are the best judge of the quality of financial products that are chosen. It's important to work with experts before choosing a fund.

"Experts can help in gathering information and all date-backed decisions. Fund managers are not only in charge of managing wealth but also fears," adds Shinghal.

First Published:Apr 29, 2020 9:25 PM IST