TORONTO, May 15, 2017 /CNW/ - Franklin Templeton Investments Corp. today announced the launch of Franklin Target Return Fund for Canadian investors seeking an outcome-oriented multi-asset portfolio that offers a specific return target within an established volatility range.
"During the market downturn in 2008/2009, many investors were rattled and moved their investments to cash instruments, like money market funds or GICs. Yet even after the markets had strong performance, some investors stayed on the sidelines and never returned to investing in equities or fixed income. Consequently, these investors are exposed to risk due to the negative impact of inflation on the value of their savings," said Duane Green, president and CEO, Franklin Templeton Investments Canada. "To address the needs of such Canadian investors, we have developed an outcome-oriented solution that aims to offer consistent short- and long-term growth, together with stabilizing strategies that are intended to offer defensive protection against market downturns."
A New Way to Approach Portfolio Construction
Franklin Target Return Fund is focused on risk diversification to provide investors with clear return targets while managing overall volatility within a specified range. This portfolio shifts the focus of diversification from traditional asset class labels to "asset behaviours" to seek to deliver its stated outcomes.
With a broad investment toolset, the portfolio team seeks to achieve risk diversification by focusing on investments with three distinct behaviours – growth, defensive and stable – and adjusting the portfolio weights among them to take advantage of market opportunities as they arise.
- Growth investments are directly related to economic growth, such as equities or assets that are typically positively correlated to equity markets, like emerging market debt, high-yield bonds, commodities and infrastructure.
- Defensive investments are typically negatively correlated to equity markets and tend to react positively to declining real economic growth, aiming to protect investors against significant losses from major market downturns. They include government bonds, gold, index-linked bonds, safe haven currencies and hedging positions.
- Stable investments tend to have low or no correlation to equity markets and aim to offer consistently higher returns than money markets, while taking on modestly higher amounts of risk. They include market neutral strategies, carry trades, relative value and risk premia to isolate specific risk factors.
"With the Target Return fund, we are moving away from thinking in pure asset class terms and more towards investing with risk factors in mind. We want to diversify the fund across a wide range of risk factors and ensure that one factor doesn't overly dominate the portfolio. That way we can achieve a broader diversification, which will help us mitigate risk," said the fund's manager, Matthias Hoppe, senior vice president and portfolio manager, Franklin Templeton Multi-Asset Solutions.
Hoppe, who is based in Frankfurt, Germany, co-manages the fund with Michael Greenberg, who is based in Toronto, Canada. With over 17 years of industry experience, Hoppe is responsible for managing multi-asset portfolios in Europe, including five portfolios with target return and volatility ranges. With 12 years of industry experience, Greenberg specializes in fixed income strategy, in addition to his co-portfolio management responsibilities for all Canadian-based managed programs.
Franklin Target Return Fund's objective is to achieve a return of four per cent net of fees over the FTSE TMX Canada 91-day T-Bill index over a rolling three-year period, regardless of the prevailing market conditions. With a pre-defined volatility range of between six to nine per cent over the same three-year period, the fund has a strong focus on managing risk and stability. The portfolio managers achieve this by actively managing direct and indirect exposure to equity and fixed income securities, cash and cash equivalents, as well as derivative instruments to access alternative investment strategies with low correlation to traditional equity and fixed income instruments.
The fund is offered under National Instrument 81-104 Commodity Pools and will be registered plan eligible.
About Franklin Templeton Investments
Franklin Templeton Investments Corp. (known as Franklin Templeton Investments Canada) is a subsidiary of Franklin Resources, Inc. [NYSE: BEN]. Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments, which provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 170 countries. Through specialized teams, the company has expertise across all asset classes – including equity, fixed income, alternative and custom solutions. The company's more than 650 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in over 30 countries, the California-based company has 70 years of investment experience and approximately US$741 billion (C$1,011 billion) in assets under management as of April 30, 2017.
For more information, please visit franklintempleton.ca or connect with Franklin Templeton on Twitter (@FTI_Canada) and read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world.
There can be no guarantee that the fund will achieve its return target, nor that it will remain within the above volatility range. All investment performance is inherently subject to significant uncertainties and contingencies, many of which are beyond Franklin Templeton's control. In considering the return target and the volatility range, prospective investors should bear in mind that such targeted performance and volatility is not a guarantee, projection or predictions and is not indicative of the future results of the fund.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
Copyright © 2017. Franklin Templeton Investments. All rights reserved.
SOURCE Franklin Templeton Investments Corp.
For further information: Media contact: Sarah Kingdon, Corporate Communications, Franklin Templeton Investments, 416.957.6191