Franklin Templeton launches alpha bond fund
Franklin Templeton Investments has announced the launch of the Franklin Flexible Alpha Bond fund, a sub-fund of the Luxembourg registered Franklin Templeton Investment Funds (FTIF).
The fund aims to provide absolute returns through a combination of current income and capital appreciation in excess of Libor 90 Day (USD) over a full market cycle, through allocation across a broad range of global fixed income sectors. Launched on 18 March 2016, the new fund is now available to Luxembourg-based investors.
The fund’s management team uses a top-down analysis of macroeconomic trends, combined with bottom-up fundamental analysis to identify potential investment opportunities utilising the deep resources across the Franklin Templeton fixed income platform.
In selecting investments for the fund, the managers choose securities in various market sectors based on their assessment of changing economic, market, industry and issuer conditions.
As part of their risk management strategy, the fund managers may actively employ long and short positions to navigate market cycles and tactically manage broad market risks from interest rate, credit, currency and country exposures.
“Given the current declining interest rate environment in Europe and the general increased market risk, there has been a rapidly growing demand for an alternative to traditional core fixed income mandates that don’t rely solely on interest rate movements for performance.
“We believe the newly-launched Franklin Flexible Alpha Bond fund may provide a more flexible, diversified, risk-managed solution to mitigate downside volatility,” said the fund’s co-lead manager, Michael Materasso, senior vice president and co-chair of the Franklin Templeton Fixed Income Policy Committee.
“The fund seeks to complement traditional fixed income asset classes by potentially providing low correlation to conventional holdings and added diversification.”
“We take an unconstrained investment approach with dynamic sector rotation, between traditional and non-traditional sectors.
“The strategy tactically uses active currency management, global rate exposure, and relative value positioning, while aiming to manage various risks, such as duration,” says the fund’s co-lead manager David Yuen, CFA, FRM, senior vice president and director of Quantitative Strategy and Risk Management for Franklin Templeton Fixed Income Group.
“The fund’s opportunity set is broad and dynamic; it includes all of the sectors of the global fixed income markets as well as various derivative types including futures, options and swaps.
US-based fund managers Materasso and Yuen have 44 and 28 years of industry experience, respectively, and are supported by the breadth and depth of Franklin Templeton Fixed Income capabilities – with a combined 170 investment professionals worldwide and over $303bn (€270.4bn) in fixed income assets under management.
The fund management team is further aided by a separate risk management team, which partners with managers to analyse and monitor portfolio risk.