The Franklin Global Corporate High Yield Bond Fund will be managed by corporate and high yield credit specialist Eric Takaha, while the Franklin Global Government Bond Fund will be co-managed by London-based managers John Beck and David Zahn.
The funds aim to capitalise on bond markets around the globe where there remain risk-adjusted opportunities for investors. Beck, who is also co-director of Franklin Templeton Fixed Income Group’s global fixed income department said: “Default rates on investment-grade sovereign debt remain at near zero. Couple this with the positive trend in global gross domestic product growth, the nascent recovery in Europe and the continued fiscal strength of many emerging markets, and we believe this may be an encouraging time for prudent investment in the asset class.”
Fixed income resilience
The global government bond fund will focus on investment grade global bonds, focusing on those securities with the best prospects for income, capital appreciation and price stability. It will invest in a combination of fixed and floating-rate debt securities issued by government and government-related entities, but will also take opportunistic exposure to corporate and mortgage-backed securities.
The high yield fund is aimed primarily at institutional investors and will invest across high yield bonds and floating-rate notes from both developed and developing world issuers. Takaha says that the group’s process aims to uncover those companies or sectors that are out-of-favour or are under-researched in the market place.
While this may initially appear to be a means to diversify the group’s fixed income range away from its dominant Templeton Global Bond Fund, the latest Morningstar statistics suggest that Europe’s largest fixed income fund has not been hit as hard by the recent fixed income market rout as some of its peers.
The fund saw outflows of €246m in July which were dwarfed by outflows of €1.21bn suffered by the PIMCO GIS Total Return Fund. The global bond fund is still ahead for the year today, up €1.71bn, with €35.2bn of assets.
