Templeton Emerging Markets Bond Fund

52 Pages·2017·1.25 MB·English

Templeton Global Macro
Dataasof30June2019
Franklin Templeton Investment Funds
Templeton Emerging Markets Bond Fund - A (acc) USD
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TempletonEmerging Markets Bond Fund
Table of Contents
Investment Capabilities Overview............................................................................................4 TGM—ESGI Centers Around 13 Indicators............................................................................23
Franklin Templeton—A Trusted, Long-Term Partner in Investment Management.......................5 Investment Process..............................................................................................................24
Templeton Global Macro—Assets Under Management............................................................6 Portfolio Construction............................................................................................................25
Fund Overview.......................................................................................................................7 Portfolio Positioning..............................................................................................................26
The Case for Emerging Market Debt.......................................................................................8 Summary of Advantages.......................................................................................................27
Credit Quality of Emerging Market Sovereign Bonds Has Steadily Improved.............................9 Summary..............................................................................................................................28
Relatively Low Correlations Historically to Other Asset Classes.............................................10 What are the Key Risks?......................................................................................................29
Discrete Performance...........................................................................................................11 Portfolio Characteristics........................................................................................................30
Prolonged Advances Versus Moderate Declines....................................................................12 Geographic Allocation...........................................................................................................31
Volatility—Fundamental vs. Market Risks..............................................................................13 Currency Exposure...............................................................................................................32
Active Currency Management—A Flexible and Opportunistic Approach..................................14 Sector Allocation...................................................................................................................33
Emerging Market Currencies Have Been Trading Below Crisis Levels....................................15 Credit Quality Allocation........................................................................................................34
Relatively High Yields Available within Emerging Markets Local Currency Bonds....................16 Maturity Allocation................................................................................................................35
On-the-Ground Research......................................................................................................17 Historical Performance..........................................................................................................36
Insight and Information Sharing Around the Globe.................................................................18 Calendar Year Returns.........................................................................................................37
Templeton Global Macro—A Team of Global Fixed Income Experts........................................19 Performance Risk Statistics..................................................................................................38
Investment Philosophy..........................................................................................................20
Appendix............................................................................................................39
ESG—Going Beyond Traditional Macroeconomic Indicators...................................................21
A Proprietary ESG Index—TGM-ESGI...................................................................................22 Management Profiles.......................................................................................40
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TempletonEmerging Markets Bond Fund
Table of Contents (continued)
Templeton Global Macro Management Profiles......................................................................41 Franklin Templeton—Environmental, Social and Governance (ESG) Investment ....................61
Integration
Module: Additional Resources........................................................................46 Glossary...............................................................................................................................62
Franklin Templeton Fixed Income..........................................................................................47 Important Disclosures...........................................................................................................63
A Specialised Local Asset Management (LAM) Team............................................................48
Module: Performance Attribution...................................................................49
Three Sources of Potential Alpha Over Time..........................................................................50
Module: Process Implementation Examples.................................................51
Navigating Global Divergence...............................................................................................52
Sector and Duration Strategy................................................................................................53
Active Duration Management................................................................................................54
Environmental, Social & Governance............................................................55
TGM-ESG Index—Scoring Methodology................................................................................56
Developed Countries Usually Exhibit Higher ESG Scores.......................................................57
Strong Relationship between GDP per Capita and ESG Score...............................................58
TGM-ESGI—Favouring Flat or Improving ESG Scores Rather Than Current Levels................59
Franklin Templeton—ESG and Corporate Sustainability.........................................................60
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TempletonEmerging Markets Bond Fund
Investment Capabilities Overview
FRANKLIN TEMPLETON
TotalCombinedAssetsUnderManagement:US$715.2Billion
2 Equity 5 Fixed Income 8 Multi-AssetSolutions 11 Alternatives
AUM US$289.2Billion US$269.8Billion US$116.0Billion US$42.2Billion
CAPABILITIES • Value • Government • Multi-AssetIncome • Commodities
• DeepValue • Municipals • DiversifiedOutcome-Oriented • Infrastructure
• CoreValue • CorporateCredit • RiskPremia • RealEstate
• Blend • BankLoans • SmartBeta • HedgeFunds
• GARP • Securitised • BalancedAllocation • PrivateEquity
• Growth • Multi-Sector • TargetDate/Risk • PrivateDebt
• Convertibles • Currencies • ModelPortfolios
• Sector • Sukuk • InflationProtection
• Shariah • ManagedVolatility
• SmartBeta
INVESTMENT • TempletonGlobalEquityGroup(1940) • FranklinTempletonFixedIncomeGroup(1970) • FranklinTempletonMulti-AssetSolutions(1948) • FranklinRealAssetAdvisors(1984)
TEAMS • FranklinEquityGroup(1947) • TempletonGlobalMacro(1986) • FranklinSystematic(2011) • DarbyOverseasInvestments(1994)
• FranklinMutualSeries(1949) • FranklinLAM-FixedIncome(1993) • K2Advisors(1994)
• FranklinTempletonEmergingMarketsEquity(1987) • Pelagos(2005)
• FranklinLAM-DevelopedMarketsEquity(1993) • BenefitStreetPartners(2008)
• EdinburghPartners(2003)
Source:FranklinTempletonInvestments(FTI),asof30June2019,basedonlatestavailabledata.TotalcombinedAssetsUnderManagement(TotalAUM)combinesU.S.andnon-U.S.AUMoftheinvestmentmanagementsubsidiariesoftheparent
company,FranklinResources,Inc.(FRI)[NYSE:BEN],aglobalinvestmentmanagementorganisationoperatingasFTI.OnlyselectedbusinessentitieswithinFTIclaimcompliancewiththeGIPSstandardsasdescribedinthetableofcontentsif
applicable.TotalandplatformAUMincludesdiscretionaryandnon-discretionaryaccounts,includingpooledinvestmentvehicles,separateaccountsandothervehicles.TotalandplatformAUMmayalsoincludeadvisoryaccountswithorwithouttrading
authority.Inaddition,assetsforwhichcertainFTIadvisersprovidelimitedassetallocationadvisoryservices,andassetsthatarenotallocatedtoFTIproductsarenotincludedintheAUMfiguresshown.FranklinTempletonMulti-AssetSolutionsmay
investinvariousinvestmentplatformsadvisedbyanumberofinvestmentadvisoryentitieswithinFTI.PlatformAUMreportedforFTMulti-AssetSolutionsthereforemayincludecertainAUMseparatelyreportedundereachutilisedinvestmentplatform.
TotalAUMalsoincludesassetsmanagedbycertainFTIadvisersthatdonotformpartoftheselectedinvestmentplatformsshown.Asaresult,thecombinedplatformAUMsmaynotequalTotalAUMandmaybecalculatedandreportedseparatelyfor
regulatoryorotherpurposesundereachinvestmentadviser.EachlocalassetmanagermaybeconsideredasanentityaffiliatedwithorassociatedtoFTIbyvirtueofbeingadirectorindirectwholly-ownedsubsidiaryofFRI,anentityorjointventurein
whichFRIownsapartialinterest,whichmaybeaminorityinterest,orathirdpartyassetmanagementcompanytowhichinvestmentadvisoryserviceshavebeendelegatedbyanFTIadviser.
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TempletonEmerging Markets Bond Fund
Franklin Templeton—
A Trusted, Long-Term Partner in Investment Management
Franklin Templeton—A Trusted, Long-Term Partner in Investment Management
Investment excellence
• Diverse investment solutions across multiple asset classes
• Time-tested investment disciplines plus exceptional research enables strong long-term performance
potential
• Integrated, comprehensive and proven approach to investment risk management
• Committed to environmental, social and governance (ESG) investment integration
Global perspective, local expertise
• Pioneer in global investing, with track record of innovation
• Unmatched breadth and depth of global presence
• Deep experience and long-term commitment to the markets we enter
Strength and experience
• Over 70 years of navigating well through all market cycles
• Global business diversified by investment objective, geography and client type
• Values-driven culture guides how we work
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TempletonEmerging Markets Bond Fund
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Templeton Global Macro has managed unconstrained strategies since 1986
Assets Under Management
Billions (USD) as of 30 June 2019
Other
Emerging Markets
$0.8
Debt
$16.5
Templeton Global
Macro Total Assets:
$115 billion
Global Multi-Sector Global Sovereign
$37.3 $60.6
Source: Franklin Templeton Investments (FTI), as of 30 June 2019 unless otherwise noted, based on latest available data. Total combined Templeton Global Macro Assets Under Management (Total Templeton Global Macro AUM) combines the U.S.
and non-U.S. AUM of the investment management subsidiaries of the parent company, Franklin Resources, Inc. (FRI) [NYSE: BEN], a global investment organisationoperating as FTI. AUM includes discretionary and advisory accounts, including
pooled investment vehicles, separate accounts and other vehicles, as well as some accounts that may not be eligible for inclusion in composites as defined by the firm’s policies. AUM may also include advisory accounts with or without trading
authority. In addition, assets for which certain FTI advisers provide limited asset allocation advisory services, and assets that are not allocated to FTI products are not included in the AUM figures shown.
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TempletonEmerging Markets Bond Fund
Fund Overview
Fund Overview
Investment Goal
• To seek total investment return, consisting of a combination of interest income, capital appreciation and currency gains
Investment Focus
• Focus on developing or emerging market government, government-related and corporate debt securities, currencies and related
derivatives.
Potential Sources of Value Added
• Yield curve
• Currencies
• Credit
For investors who seek to:
• Diversify overall portfolio with an emerging markets bond allocation
• Capitalise on the growth potential and economic fundamentals in many emerging markets
• Capture income opportunities in emerging markets fixed income
• Pursue attractive, risk-adjusted returns over the long term
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TempletonEmerging Markets Bond Fund
The Case for Emerging Market Debt
The Case for Emerging Market Debt
Generally Strong Economic Fundamentals and Attractive Yields
• Emerging markets have increased their share of the global economy and capital markets
• Economic fundamentals in many emerging markets appear healthier than in many developed
countries, even though yields on many emerging market debt issues have generally been higher
Improved Credit Quality
• Credit quality and liquidity in emerging market debt have generally improved over the last
15 years
Complement to Other Asset Classes
• Diversification to an overall portfolio due to historically low correlations to most major asset
classes
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TempletonEmerging Markets Bond Fund
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Average Credit Ratings—EM Sovereign Debt1
As of 30 June 2019
B
B
B
B-
B
B
Bond Credit Rating B BB+
B
B-
B
+
B
2002 2004 2006 2009 2011 2014 2016 YTD2019
Source: Intercontinental Exchange (“ICE”). Data from third party sources may have been used in the preparation of this material and Franklin Templeton has not independently verified, validated or audited such data. Franklin Templeton and its third
partysources accept no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user. Important data provider notices and terms
available at www.franklintempletondatasources.com.
1. The average credit ratings are represented by the ICE BofAMLEmerging Markets External Sovereign Index. This market capitalisationweighted index tracks the performance of U.S. dollar-and euro-denominated emerging markets sovereign debt
publically issued in the major domestic and eurobondmarkets. The composite rating is calculated by assigning a numeric equivalent to the ratings. The average of the numeric equivalents for each agency that rates a bond is rounded to the nearest
integer and then converted back to an equivalent composite rating. The scale is from 1–22 with 1=AAA, 2=AA1/Aa1/AA+/AA high, 3=AA2/Aa2/AA, etc.
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TempletonEmerging Markets Bond Fund
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Templeton Emerging Markets Bond Fund –A (Qdis) USD
5-Year Rolling Correlations
Period Ending 31 March 2019
1.00
5 Years Ending 31/03/2019
U.S. Bonds 0.00
0.75
High Yield Bonds 0.48
Commodities 0.31
0.50
World Stocks 0.38
Hedge Funds 0.32
0.25
U.S. Stocks 0.27
FX Carry 0.32
0.00
Global Government Bonds 0.19
-0.25
8 9 9 0 1 2 2 3 4 4 5 6 7 7 8 9
0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1
Jun- Mar- Dec- Aug- May- Jan- Oct- Jun- Mar- Nov- Aug- Apr- Jan- Oct- Jun- Mar-
U.S. Bonds High Yield Bonds Commodities World Stocks
Hedge Funds U.S. Stocks FX Carry Global Government Bonds
Correlation: 1 = perfect positive correlation 0 = no correlation -1 = perfect negative correlation
The above chart is for illustrative and discussion purposes only. U.S. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Index; U.S. Stocks are represented by the S&P 500 Index; Hedge Funds are represented by the HFRI Fund
Weighted Composite Index; High Yield Bonds are represented by the FTSEHigh Yield Market Local Currency Index; World Stocks are represented by the MSCI World Index; Commodities are represented by the Bloomberg Commodities Index; Global
Government Bonds are represented by the JP Morgan Global Government Bond Index; FX Carry are represented by the Deutsche Bank G10 Currency Future Harvest Index. Important data provider notices and terms available at
www.franklintempletondatasources.com. The information is historical over the indicated time period and may vary significantly over other past time periods.
Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.
Past performance is not an indicator or a guarantee of future performance.
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