Portfolio Manager Perspectives

Jeff Benjamin

New Franklin fund does global locally

Taps firm's asset management operations around the world

Jan 20, 2011 @ 11:05 am

By Jeff Benjamin

Franklin Templeton Investments has expanded the adage “all politics are local” to international investing.

The Franklin World Perspectives Fund, launched Dec. 16, has raised the stakes on the idea of a globally managed mutual fund for U.S. investors. Following in the footsteps of an offshore version launched in October 2008, it taps local asset management operations in offices around the globe.

That is no small distinction, according to Stephen Dover, international chief investment officer for Franklin Templeton's local asset management group.

“The history of investing globally has normally involved an Anglo person getting on a plane” and traveling to a foreign country to do research, said Mr. Dover, who is portfolio manager of the new fund. “But as [the global markets] have developed, the quality of the local money managers have improved as well.”

The fund, which is about two weeks away from having a ticker symbol, allocates slices of the portfolio to autonomous Franklin Templeton asset management offices in India, Vietnam, China, Japan, Korea, Canada, Brazil, Dubai and the United Kingdom.

Franklin Templeton started opening local offices, run by local asset managers, 15 years ago. In total, the local asset management operations now manage $20 billion.

Combing the local expertise into a single fund creates a globally diversified and dynamic portfolio of more than 250 securities, with an annual turnover rate of around 80%.

“This is a fund that is managed 24-7,” Mr. Dover said. “That's a lot different from just having a fund managed whenever the portfolio manager is in the office.”

Mr. Dover is responsible for allocating slices of the portfolio to the local asset managers.

A neutral allocation, he explained, would track the MSCI All Country Index, which Franklin Templeton has tweaked to add a minor weighting in frontier markets such as Vietnam.

The portfolio's largest weighting is the United States, at 40%, compared with a 42% benchmark weight.

The fund is tracking the benchmark with a 25% allocation to Europe.

The next-largest weighting is the Asia-Pacific region at 18%, compared with a 15% benchmark weight.

Other examples of where the portfolio is out of sync with the MSCI index are the 5.5% allocation to Japan, versus 9% for the benchmark; a 3% allocation to Brazil, compared with a 2%; and 1.5% to frontier markets, which make up just 0.5%.

Mr. Dover said that in terms of performance, the impact of the local asset management presence is more important than any benchmark overweighting or underweighting.

“Most of the value will be created by the local managers,” he said. “Instead of just using the research from the local managers, we are empowering the local managers.”

The offshore version of the fund gained 14.8% last year, compared with a 13.3% benchmark return.

For an example of the unique perspective added by the local asset managers, consider the $5.8 billion Templeton World Fund Ticker:(TEMWX), which has 94 positions, only 10 of which are also in the World Perspectives Fund.

“Our local asset management teams provide a bottom-up perspective on market conditions and valuations,” Mr. Dover said. “This insight means that our investments are not limited to the largest and most visible companies in each market but often include less recognizable names.”

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

0
Comments

What do you think?

View comments

Upcoming event

Nov 13

Conference

Top Advisory Firm Summit

Formerly known as the Best Practices Workshop, this new one-day conference will also include content from the Best Places to Work event!The Top Advisory Firm Summit will provide CEOs, COOs, CTOs, CMOs, and Managing Partners from the... Learn more

Most watched

INTV

How advisers can be a gamechanger for women investors

Why women defer to men when it comes to finances and how advisers can combat this phenomenon and make a difference for female investors, according to Heather Ettinger, founder and CEO Luma Wealth Advisors.

INTV

How the 2020 elections could impact ESG investing

Joseph Keefe, president of Impax Asset Management, on the elections and how advisers can build a bridge to the next generation of clients with ESG investing.

Latest news & opinion

Charles Schwab reportedly in talks to buy USAA brokerage, wealth management business

The deal would net Schwab roughly $100 billion in new assets.

Advisers scramble to help retirees navigate looming Fed rate cut

The Fed's first interest-rate cut in a decade has advisers warning against chasing the bait of risk over safety.

CFP Board to announce possible delay of new fiduciary standard

Organization's CEO confirms meeting with Edward Jones, says broker-dealer still considering how to move forward.

Departure of Alexander Acosta could slow DOL effort to revise fiduciary rule

Acting secretary Patrick Pizzella will have to make political decision to move ahead.

SEC member Peirce to brokers: Talk to us early, often about Reg BI implementation problems

She's willing to advocate for additional compliance time if firms have made a good faith effort.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print