Franklin Templeton Investments has added the Franklin Templeton dynamic growth and value fund to the funds in its Luxemburg-based Sicav.
The fund aims to produce capital growth by investing in a growth portfolio and a value portfolio, which are managed by separate arms of the Franklin Templeton group. Templeton's Gary Motyl will manage the value portfolio and Fidicuary Trust's Shelia Hartnett-Devlin will manage the growth element.
Initially, the fund will be split equally across the two portfolios, but this will change along with stockmarket conditions. The fund will take a contrarian approach, investing more capital in the underperforming style when it looks as though it is about to move back in favour.
A mathematical calculation will be used to anticipate any shifts towards the underperforming style. This is known as the momentum indicator and it will be controlled by Craig Brownell, senior vice president of Franklin Templeton Asset Strategies. Brownell will look at the divergence in prices between growth stocks and value stocks says this will help to avoid the problems of buying and selling stocks too early.
Growth stocks and value stocks tend to perform well at different times, so a fund which can switch easily between both styles may protect investors from the volatility that comes with sticking within one style. However, the success of this fund depends not only on the stockpicking abilities of the fund managers, but also the accuracy of the momentum indicator in deciding when to tilt the portfolio towards each style.
According to Standard & Poor's, the Templeton growth fund is ranked 15 out of 129 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to September 13, 2002.