Case Name :      Franklin Templeton India: The Cash Holding Dilemma

Authors :           Nupur Pavan Bang, Dhruva Raj Chatterji, Vikram Kuriyan

Source :             Ivey Publishing

Case ID :            W12524

Discipline :        Finance

Case Length :    17 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Franklin Resources Inc. is one of the largest and most respected global fund houses with a presence in India. The case highlights the structure, investment process and philosophy of its fund management team in India. The case presents the specific issue of fund managers holding large amounts of cash during market downturns. There is one school of thought that attributes lower volatility and better risk-adjusted returns with high cash holdings. The other school of thought believes this approach goes against the philosophy of investment management. It believes people give money to fund managers to invest, not to hold in the form of cash. A fund should always be fully invested or nearly fully invested. The chief investment officer at Franklin Templeton India is of the second school of thought and is faced with the challenge of convincing a team of young analysts and managers of its soundness. He presents a set of data to this team and asks them to analyze performance during periods of market downturns in order to arrive at a conclusion.