Franklin Templeton Investments Launches New Templeton Emerging Markets Local Currency Bond Fund

From Franklin Templeton Investments
Contact Saira Khan
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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.

Notes to Editors:

  1. Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 170 countries. Through specialized teams, the company has expertise across all asset classes—including equity, fixed income, alternative and custom solutions. The company’s more than 650 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in over 30 countries, the California-based company has 70 years of investment experience and over $770 billion in assets under management as of 31 January 2018.

    In the UK, Franklin Templeton Investments offers a distinct and diversified investment line-up, comprising three major international equity houses (Franklin, Templeton and Mutual Series); a specialist UK equity house Franklin Templeton Fund Management Limited); several dedicated country-specific equity houses; complemented by a substantial global fixed income group. Franklin Templeton Investments promotes to UK intermediaries 100 funds, including:
    • 86 Luxembourg-registered SICAV funds including 70 GBP share classes
    • 14 UK-registered OEIC funds
    • 1 investment trust

  2. The Templeton Emerging Markets Local Currency Bond Fund is a sub-fund of Franklin Templeton Investment Funds (FTIF), a Luxembourg-domiciled SICAV. This document is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of the Luxembourg-domiciled SICAV Franklin Templeton Investment Funds. Nothing in this document should be construed as investment advice. Opinions expressed are the author’s at publication date and they are subject to change without prior notice.

    Subscriptions to shares of FTIF can only be made on the basis of the current prospectus, and, where available, the relevant Key Investor Information Document, accompanied by the latest available audited annual report and the latest semi-annual report if published thereafter. The value of shares in FTIF and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future performance. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be affected by currency fluctuations. In emerging markets, the risks can be greater than in developed markets. An investment in FTIF entails risks which are described in the FTIF’s prospectus and, where available, the relevant Key Investor Information Document. Investments in derivative instruments entail specific risks that may increase the risk profile of the fund and are more fully described in FTIF’s prospectus and where available in the relevant Key Investor Information Document.

    References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund’s holding at any one time. No shares of FTIF may be directly or indirectly offered or sold to nationals or residents of the United States of America. Shares of FTIF are not available for distribution in all jurisdictions and prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest.

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.