Franklin Templeton maintains emerging markets balance

7 October 2011 6:06 pm

This Luxemburg fund will invest at least 25 per cent in equities and at least 25 per cent in bonds. It will be managed jointly by Mark Mobius and Michael Hasenstab, who head up the Templeton emerging markets group and Franklin Templeton fixed income group respectively.

The fund aims to provide income and growth, with the proportion of assets allocated to equities and bonds depending on the fund managers¹ view of the valuation, risk and opportunities within each asset class. Holdings will be identified through bottom-up analysis of sector, security and issuer along with top-down economic analysis. To do this, the investment teams draw on the expertise of Franklin Templeton¹s research teams on the ground in local markets.
 

Franklin Templeton notes that interest in emerging markets has been driven by the growth potential of the countries in this region. The advantage of having both equity and bond teams on board is that the fund can provide broad emerging markets exposure across asset classes rather than just one. Emerging market equities and bonds tend to have low correlation to each other so the portfolio achieves diversification with potentially lower volatility and higher risk-adjusted returns than a pure emerging markets equity fund.

A mix of equities and bonds within a portfolio that shifts between the two depending on the economic environment can eliminate the need to investors and their advisers to allocate between the asset classes themselves as there will be two specialist teams to make these investment decisions.

However, some investors may prefer multi-asset emerging market funds from companies including Baring Asset Management, JP Morgan Asset Management and Generation Asset Management, which takes a fund of funds approach.

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