Franklin Templeton Investments has introduced a new emerging markets local currency bond fund that will mainly invest in the local-currency debt of issuers in emerging markets.
The vehicle, dubbed Templeton Emerging Markets Local Currency Bond, will incorporate a benchmark unconstrained approach to maximise returns. It will seek returns from interest income, capital appreciation as well as currency gains.
It aims to capture short-term market inefficiencies and long-term potential using macroeconomic and country-specific research as well as fundamentals-based valuation analysis.
Franklin Templeton Investments managing director of EMEA and India Vivek Kudva said: “This launch is part of Franklin Templeton’s effort to build a clearly defined emerging market debt offering separating local-currency strategies from hard-currency strategies, as these are increasingly viewed as separate asset classes.”
The new fund will be managed by Templeton Global Macro CIO Michael Hasenstab and Templeton Global Macro director of research Sonal Desai. The pair will be supported by the firm’s 170-member global fixed income platform team.
“The opportunity set in emerging debt markets has expanded dramatically over the last two decades, predominantly driven by a substantially greater issuance of local-currency bonds. Those increased volumes have been largely supported by growing domestic investor bases and strengthening local economies. The net effect in many cases has been improved access to capital for countries, reduced costs of capital, improved local market liquidity and lower credit risks for investors,” Hasenstab noted.