Franklin Templeton Investments has launched The Templeton Emerging Markets Local Currency Bond 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. Luxembourg-based Investors can access this new Fund from 20 February 2018.
The Fund’s portfolio managers are California-based Michael Hasenstab, PhD, Executive Vice President and CIO and Sonal Desai, PhD, 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 credit 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,” says Dr Hasenstab. 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 capitalise on short-term market inefficiencies and capture long-term potential. Risk management is incorporated in every stage of the investment process.
Vivek Kudva, Managing Director, EMEA and India at 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 USD124 billion as of December 31 2017, the group consists of 21 portfolio managers, analysts and traders, including seven PhD 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.
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