From | Franklin Templeton Investments |
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Contact | Saira Khan |
Telephone | (0)207073-8644 |
New Strategy Gives Investors Access to Diversification Benefits and Inflation Hedges to Reduce External Debt Vulnerabilities
London, 20 February 2018 – Franklin Templeton Investments1 today launched The Templeton Emerging Markets Local Currency Bond Fund2 (the “Fund”), a sub-fund of the Luxembourg-registered Franklin Templeton Investment Funds (FTIF) range. Using a high conviction, benchmark unconstrained approach, the fund aims to maximise total investment return, consisting of a combination of interest income, capital appreciation and currency gains, by investing predominately in the local-currency debt of issuers in emerging market countries. UK Investors will be able to access this new Fund, subject to FCA approval in the coming weeks.
The Fund’s portfolio managers are California-based Michael Hasenstab, Ph.D., Executive Vice President and CIO and Sonal Desai, Ph.D., SVP, Director of Research for Templeton Global Macro. Both Dr. Hasenstab and Dr. Desai have an established track record of actively managing emerging market interest rate strategies, currency positions and credits exposures within the flagship strategies managed by Templeton Global Macro. They will be supported by the breadth and depth of Franklin Templeton’s global fixed income platform with over 170 investment professionals worldwide.
“Local-currency emerging markets have offered some of the most compelling investment opportunities across global fixed income markets, in our view. We’ve recently been focusing on a select set of countries with domestically resilient economies and relatively higher yields.” said Dr. Hasenstab.
He added: “The opportunity set in emerging debt markets has expanded dramatically over the last two decades, predominantly driven by a substantially greater issuance of local-currency bonds. Those increased volumes have been largely supported by growing domestic investor bases and strengthening local economies. The net effect in many cases has been improved access to capital for countries, reduced costs of capital, improved local market liquidity and lower credit risks for investors.”
The investment team uses a multi-tiered approach combining in-depth macroeconomic and country-specific research with fundamentals based valuation analysis to capitalize on short-term market inefficiencies and capture long-term potential. Risk management is incorporated in every stage of the investment process.
Martyn Gilbey, UK Country Head, Franklin Templeton Investments commented: “Emerging-market local currency bonds have historically provided diversification to other major asset classes. In addition, investors can potentially benefit from the inflation hedge aspect of emerging market currencies while reducing the external debt vulnerabilities associated with hard currency debt. This launch is part of Franklin Templeton’s effort to build a clearly defined emerging market debt offering separating local-currency strategies from hard-currency strategies, as these are increasingly viewed as separate asset classes. We believe this fund provides an option for investors with a preference for a pure investment strategy and for those looking for ‘building blocks’ they can incorporate into their overall portfolio.”
Templeton Global Macro has been a pioneer of unconstrained global fixed income, having launched its flagship Templeton Global Bond Fund in 1986. With assets under management of over US $124 billion as of December 31, 2017, the group consists of 21 portfolio managers, analysts and traders, including seven Ph.D holders. The team draws on the breadth of Franklin Templeton’s global fixed income capabilities with investment professionals based in London, New York, San Mateo, and Singapore and supported by investment professionals in Australia, Brazil, Canada, China, India, Malaysia, Mexico, Poland, South Korea, and the U.A.E. This structure enables the Templeton Global Macro group to gain a true global perspective of the interaction between economies and the world’s bond markets.
This press release is intended to be of general interest only, and does not constitute professional advice. Franklin Templeton Investments and its management groups have exercised professional care and diligence in the collection and processing of the information in this press release. Franklin Templeton Investments makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton Investments shall not be liable to any user of this report or to any other person or entity for the inaccuracy of information contained in this press release or for any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission. Opinions expressed are the author’s at publication date and they are subject to change without prior notice. Given the rapidly changing market environment, Franklin Templeton Investments disclaim responsibility for updating this material. Any research and analysis contained in this document has been procured by Franklin Templeton Investments for its own purposes and is provided to you only incidentally. Issued by Franklin Templeton Investment Management Limited (FTIML), Cannon Place, 78 Cannon Street, London EC4N 6HL. FTIML is authorised and regulated by the Financial Conduct Authority.