Franklin Templeton Investments has launched the Franklin Absolute Return Bond Fund, a sub-fund of our UK-registered OEIC, for UK investors.
The fund will be managed by San Mateo based David Yuen, Senior Vice President, Portfolio Manager, Franklin Templeton Fixed Income Group, and New-York based Michael J Materasso, Senior Vice President, Franklin Templeton Fixed Income Group.
The aim of the fund is to provide an absolute return, through a combination of income and capital growth, each calendar year. In addition, the Fund aims to provide an overall return of 2-3 per cent above the London Interbank Offered Rate (LIBOR) 90 Day (GBP) over a full market cycle (being 3-5 years) after management fees are deducted. Additionally, the strategy aims to maximise risk-adjusted returns while minimising drawdowns.
This fund launch provides UK investors access to the proven strategy offered globally through the US-registered and Luxembourg-registered Franklin Flexible Alpha Bond Funds, which collectively have assets under management of USD900 million.
The Franklin Absolute Return Bond Fund is benchmark-unconstrained and will invest primarily in a diversified portfolio of fixed and floating rate debt securities and related derivatives.
David Yuen, Senior Vice President, Portfolio Manager, Franklin Absolute Return Bond Fund, says: “We are excited to bring this strategy to UK investors and offer an unconstrained, risk focused approach where volatility is managed. Our investment process leverages the in-depth knowledge of our experienced fixed income teams globally and our approach with dynamic sector rotation, active currency management, security selection and relative value positioning, while aiming to manage risks such as duration.”
Alex Brotherston, Head of UK Retail Sales, says: “We’ve seen a growing demand for outcome investing as investors look for alternatives to traditional fixed income mandates that don’t rely solely on interest rate movements for performance. The Franklin Absolute Return Bond Fund offers a flexible mandate that brings diversification to both the returns and risk profile of an investor’s fixed income allocation.
“We believe this fund will appeal to investors who are looking to diversify and complement the core fixed income portion of their portfolios, whilst accessing pure alpha and hedging their portfolios to mitigate downside volatility which is inherent in long-only strategies.”