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Templeton bond fund goes for flexibility

The Templeton global total return bond fund is one of two bond funds recently launched by Franklin Templeton Investments.

The fund uses the same investment strategy as the offshore Templeton global total return bond fund. This fund was launched in 2003 and was awarded a five star rating from Morningstar in August 2006.

The new fund has the flexibility to invest across all parts of the fixed income market on a global basis, diversifying across countries, sectors and currencies.

Managers John Beck and Michael Hasenstab are supported by a network of 100 fixed income analysis based in Asia, Europe, Latin America and the US. Beck and Hasenstab are senior members of the Franklin Templeton fixed income group. Hasenstab joined the company in 1995 while Beck, who has over 21 years investment experience joined in 1990 from Saudi International Bank.

When selecting bonds for the portfolio, the fund managers rely heavily on in-house research, which is used to determine how much to invest in each type of fixed income security or currency. To determine country selection by assessing macro-economic factors such as interest rate movements and government policies in each country that will impact currency and fixed interest markets. They will look at monetary policy, the economic cycle, politics, valuations, expectations for volatility and take a view of currencies on a one to three month time span. The final portfolio is constructed from the best ideas provided by Templeton’s sector specialists.

Franklin Templeton believes it is important to invest across all areas in the bond market, as different types of bonds do not behave in the same way at the same time. They react differently to economic and interest rate changes, so investing across all parts of the market increases the chances of being invested in the best performing fixed interest sector at all times.

This fund is likely to appeal to investors who want global diversification across various bond markets. Exposure to emerging countries and high yield bonds could increase the risk, but diversity within the portfolio across 200 to 300 holdings may alleviate investors’ concerns.


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