Franklin Templeton has launched an Absolute Return bond fund for UK investors.
The new launch will aim to deliver an overall return of 2 to 3 per cent above the 90-day Libor rate over a full market cycle of three to five years after fees.
It will aim to maximise risk-adjusted returns and deliver a combination of income and capital growth.
A sub-fund of the group’s UK-registered Oeic, it will be managed Franklin Templeton senior vice president David Yuen, who is based in California, and New York-based Michael J Materasso.
With a benchmark-unconstrained approach, the fund will invest in a range of fixed- and floating-rate debt securities and derivatives. It will follow the strategy of the US- and Luxembourg- registered Franklin Flexible Alpha Bond funds, which manage total assets of $900m.
Yuen says: “Our investment process leverages the in-depth knowledge of our fixed income teams globally with dynamic sector rotation, active currency management, security selection and relative value positioning, while aiming to manage risks such as duration.”
Franklin Templeton head of UK retail sales Alex Brotherston says the launch was in response to a growing demand for investors looking for traditional fixed income mandates.
He adds: “We believe this fund will appeal to investors looking to diversify and complement the core fixed income portion of their portfolio, while access pure alpha and hedging their portfolio to mitigate downside volatility.”