Aim: Growth and income by investing in emerging market equities and government, government related and corporate bonds in emerging markets
Minimum investment: Lump sum $5,000 or currency equivalent
Investment split: At least 25% in emerging market equities, at least 25% in emerging market bonds
Place of registration: Luxemburg
Charges: Initial 5%, annual 1.8%
Commission: Subject to negotiation
Tel: 020 7073 8600
Franklin Templeton Investments has combined the investment skills of its emerging market equities and fixed income teams in the Templeton emerging markets balanced fund. This aims for income and growth by investing at least 25 per cent in equities and at least 25 per cent in bonds.
Capital Trust Financial Management partner Bruce MacFarlane says: “The recent launch of the Templeton emerging market balanced fund may prove a timely addition for those investors and their advisors who seek exposure to these particular investment markets, but with a fund that offers a lower degree of volatility than the more traditional emerging market equity funds that dominate the sector.”
MacFarlane points out that the fund invests in a mixture of emerging market equity and debt and is split according to the managers’ views of the valuations, risk and opportunity between each of these asset classes.
“Interest in emerging markets has increased significantly over recent years as investors have looked to diversify their portfolios away from the highly indebted low growth developed markets in favour of the emerging economies. By contrast, these have benefited from strong, in many cases commodity led growth and lower levels of debt.”
MacFarlane adds that the fund is managed by Mark Mobius and Michael Hasenstab, both highly respected fund managers in the emerging markets sector. “They will follow a bottom-up stock picking approach coupled with top down economic analysis. The fund looks to be an attractive addition to the emerging markets sector and the charges and remuneration are in keeping with other similar funds.”
Turning to the potential drawbacks, MacFarlane says: “There is little I dislike about this fund. For those interested in emerging markets this fund brings together the expertise of the Templeton emerging market equity and debt teams in one strategy.
“According to Templeton this combination and the low correlation between emerging market debt and equity should provide investors with lower volatility and higher risk adjusted returns than that currently available from a pure emerging market equity fund, opening the sector to new investors who have a more balanced attitude to the risk inherent in these markets.”
Discussing products that could provide the main competition, MacFarlane says: “The emerging market sector is now well represented by most of the well-known fund management groups but Templeton has an advantage in the well respected and high profile Mark Mobius who will undoubtedly help attract investors to the fund.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average