Franklin Templeton Announces New Multi-Sector Impact Bond Fund For European Investors Sub-Advised By Brandywine Global

Franklin Templeton Announces New Multi-Sector Impact Bond Fund For European Investors Sub-Advised By Brandywine Global

• New impact fund will support the transition towards a more sustainable and equitable economy via active engagement

London, 5 December 2022 –Franklin Templeton¹ is pleased to announce the launch of its Brandywine Global Multi-Sector Impact Fund², a sub-fund of the Legg Mason Global Funds plc, an Irish domiciled fund range². This new impact fund is registered for distribution in the UK, Ireland, Germany and Italy³. It will also be registered in Switzerland in the coming weeks.

This new Article 8⁴ fund aims to help the transition to a sustainable and equitable economy by investing in and engaging with fixed income issuers that have potential to materially improve their environmental and social practices. The portfolio management team believes that addressing sustainability risks can also unlock performance potential, meaning the fund can seek out competitive returns, while maintaining the diversification benefits of multi-sector fixed income. Built on Brandywine Global’s existing multi-sector investment framework, the fund’s strategy emphasizes dynamic sector rotation, downside risk management, and a dual approach to macroeconomic and fundamental research, with a continuous focus on delivering measurable positive impact.

William Vaughan, Associate Portfolio Manager, Brandywine Global Multi-Sector Impact Fund, commented: “As active fixed income investors, we can play a significant role in helping companies adopt more sustainable practices. Rather than excluding whole industries from our investment universe, this fund aims to provide capital and expert guidance to those issuers most in need of improvement, in areas like biodiversity preservation, workforce equity and safety, and renewable power. Consequently, we expect a substantial portion of the impact from our portfolio will come from active engagement with companies in industries that may be overlooked by other Article 8 and 9 funds.

We believe the biggest sources of alpha for this fund will come from sector rotation and duration and quality management in addition to potential spread tightening as ESG risks reduce. Risk management enhancements should be supported by Brandywine Global’s ESG and impact-orientated approach and improvements in ESG metrics as a result of increased engagement.”

Focus on fixed income active ownership

It is common for sustainability-focused funds to exclude the highest emitting sectors, which can represent a large portion of the investment universe. For example, by excluding issuers in the industrials, materials, energy and utilities sectors, the four highest emitters listed in the Bloomberg Aggregate Corporate Bond Index, investors are not engaging with companies involved in 84% of the emissions in the index and 25% of the market value of the index⁵. This new fund seeks to influence better sustainability practices across a wide spectrum of industries, through engagement and positive impact.

“To fund the transition towards a more sustainable and equitable economy we take an active ownership approach. We engage with issuers that demonstrate, in our opinion, the most potential to achieve these sustainable transition agendas. Our qualitative analysis also shows that some of the more overlooked, lower-rated names are likely to get upgraded and have the potential to outperform,” Vaughan added.

Measuring impact

The Brandywine Global Multi-Sector Impact Fund seeks to invest in issuers ​that will have a measurable positive improvement. The investment strategy seeks to identify issuers with the greatest potential to improve their social and environmental characteristics. This includes companies that are just beginning on their sustainability journey, as well as those already making substantial progress.

The portfolio management team sets issuer-specific key performance indicators (KPIs) to target and measure sustainability progress and the effectiveness of their engagements. A holding will be divested if a particular KPI does not reflect improvement or if an issuer has not implemented a policy to address existing sustainability risk.

Jaspal Sagger, Head of Global Product Strategy, Franklin Templeton, commented: “While we have seen tremendous product development activity since SFDR came into force last year, innovation has not addressed the full range of client sustainability preferences and motives, particularly in fixed income. Many of our clients have conveyed an interest in funding the transition to a more sustainable world, so we are delighted to bring to market a new fund that has been explicitly designed to deliver measurable impact through engaging with companies on their sustainability journey.”

Managed by a long-tenured investment team, the strategy also brings together demonstrated sector experience in global sovereigns, corporate and structured credit, emerging markets, and currencies.

William Vaughan is an associate portfolio manager and senior research analyst on Brandywine Global’s Global Fixed Income team. With more than 10 years of industry experience, he joined the firm in June 2015 and is based in Franklin Templeton’s London office. Vaughan earned his M.Sc. in Carbon Management and Economics from the University of Edinburgh Business School and his B.Sc. in Environmental Geoscience from Durham University with a focus on climatology.

About Brandywine Global

Brandywine Global Investment Management, LLC ("Brandywine Global") believes in the power of value investing. Acting with conviction and discipline, Brandywine Global looks beyond short term, conventional thinking to rigorously pursue long-term value. Since 1986, it has provided a range of differentiated fixed income, equity and alternative solutions to clients worldwide. Brandywine Global, a specialist investment manager of Franklin Resources, Inc., manages $52 billion in assets under management as of September 30, 2022, with headquarters in Philadelphia and offices in Singapore and London. Visit www.brandywineglobal.com and its industry-leading Around the Curve blog.

–  ENDS –

Contacts:

Constanze Ullmann Senior Corporate Communications Manager Franklin Templeton Cannon Place, 78 Cannon Street London EC4N 6HL Tel: + 447391380187 Email: [email protected]

Dorine Johnson Head of Corporate Communications EMEA Franklin Templeton Cannon Place, 78 Cannon Street London EC4N 6HL Tel: +44 7919532079 Email: [email protected]

This is a marketing communication. Please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions.

1. Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 155 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers boutique specialization on a global scale, bringing extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has 75 years of investment experience and approximately $1.3 trillion in assets under management as of 31 October, 2022. For more information, please visit www.franklintempleton.co.uk and follow us on LinkedIn, Twitter and Facebook.

2. The Brandywine Global Multi-Sector Impact Fund is a sub-fund of the Irish domiciled Legg Mason Global Funds PLC range.

3. Restricted registration in Italy for institutional investors.
4. This fund has been classified as Article 8 under the Regulation on sustainability related disclosures in the financial services sector (EU) 2019/2088. These are Funds which promote, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices. Further information in relation to the sustainability-related aspects of the Fund can be found at franklinresources.com/countries. Please review all of the fund's objectives and characteristics before investing.
5. Source: MSCI, October 2022.

This document is based on an update from Brandywine Global, a subsidiary of Franklin Templeton. The views expressed are opinions of the Portfolio Management team as of the date of this material and are subject to change based on market and other conditions without notice and may differ from other investment professionals or from those of the firm as a whole.

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security, or fund, or to adopt any investment strategy. It does not constitute legal or tax advice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. Individual securities are examples only and are not recommendations to buy or sell an investment. Opinions expressed are subject to change without notice and do not consider the needs of investors. For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund and will not be investing directly in the underlying assets of the fund.

This is a sub-fund of Legg Mason Global Funds plc ('LMGF'). LMGF is an open-ended investment company with variable capital, organised as an undertaking for collective investment in transferable securities ('UCITS'). LMGF is authorised in Ireland by the Central Bank of Ireland. Information has been prepared from sources believed reliable. It is not guaranteed in any way by any Franklin Resources, Inc. company or affiliate (together 'Franklin Templeton'). Before investing you should read the application form Prospectus and KIID. The fund documents may be obtained free of charge in English, German and Italian from LMGF's registered office at Riverside Two, Sir John Rogerson's Quay, Grand Canal Dock, Dublin 2, Ireland, from LMGF's administrator, BNY Mellon Fund Services (Ireland) Limited, or please visit www.franklintempleton.co.uk to be directed to your local Franklin Templeton website.

In addition, a summary of investor rights is available from franklintempleton.co.uk​. The summary is available in English.​​

​The sub-funds of LMGF are notified for marketing in multiple EU Member States under the UCITS Directive. LMGF can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 93a of the UCITS Directive.

Franklin Templeton and its management groups have exercised professional care and diligence in the collection and processing of the information in this press release. Franklin Templeton makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton 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.

Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes.

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