An unconstrained, global approach to traditional
fixed income

Investors' beliefs have been tested by recent bouts of market volatility. Times of market distress showed that traditional bonds offer little in the way of diversification. Where can investors seek the benefits of fixed income while minimizing the negative impact of volatile equity markets?

We think you might consider our Templeton Global Bond Fund and Global Total Return funds.1 Recent performance shows these to be global funds well-suited to the current market environment - offering true diversification from equities and the potential for strong returns. The funds can also boast a historically low-to-negative correlation with traditional bonds.

With our active approach and unique ideas, we offer the potential for competitive returns and diversification in various market conditions.


Global Macro Views – An update on ESG Scores

Templeton Global Macro Group believes ESG is important for identifying investment opportunities.
In this 2019 update, we have highlighted three countries showing projected improvement and three showing expected deterioration.

Download ESG update

LOOKING AT THE GLOBAL BOND MARKET ANEW

The Fund is managed in a benchmark-unconstrained manner.

Geographic Allocation: Fund vs. Benchmark Information

As of 31 March 2019 - Market Value2

Our Global Fixed Income Funds

HOW DO WE CAPITALIZE ON GLOBAL BOND AND CURRENCY OPPORTUNITIES?

The Templeton Global Bond Fund aims to achieve returns in:

  • Interest income
  • Capital
  • Currency

We do this by investing in a portfolio of fixed or floating rate debt securities, and debt obligations issued by governments worldwide.

Why Consider This Fund?


Flexibility: Investing in currencies, interest rates and sovereign credit investment, all independent of a benchmark.


Contrarian strategy: Making investments that might lag their benchmark in the short term, but are poised to rebound and perform well over the long term.


Geographically diverse: Ensuring that your returns don't rely on a single bond market.

A WORLD OF FIXED INCOME OPPORTUNITIES AWAITS

The Templeton Global Total Return Fund invests in both government and corporate bonds to achieve total return in:

  • Interest income
  • Capital
  • Currency

We do this by investing in various sources of income, unconstrained by any benchmark.

Why Consider This Fund?


Income Potential: Providing an attractive monthly dividend yield via a global-bond portfolio.3


More Opportunities: Generating returns by investing in a combination of interest rate, currency, sovereign bonds and corporate credit.


Long-term fundamental macro-economic research: Identifying high-conviction opportunities.

DISCOVER MULTIPLE SOURCES OF RETURN

We use rigorous analysis to find economic imbalances. Our goal is to invest in value opportunities in curve (duration, which refers to a bond's sensitivity to interest rates), currency and credit. And every investment we make is in line with our own risk targets, regardless of where the benchmark is invested.

Why do we position our funds for a rising interest rate environment on the yield curve?

To think that rates will never go higher, is not only just wishful thinking, but complacency. We manage our funds to have a negative correlation with US Treasury yields and have kept their durations low on the conviction that the United States will raise interest rates.

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Source: Franklin Templeton Investments, as of 31 May 2019. Indices are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Average Duration and Yield to Maturity figures reflect certain derivatives held in the portfolio (or their underlying reference assets). Past performance is not an indicator nor a guarantee of future performance.

Our currency investments are actively positioned for a rise in interest rates

Our approach is unconstrained, so we can invest in countries outside of the fund's benchmark and take directional views on currency. For example, in 2018 we had long positions in the US dollar and short positions in the euro, yen and Australian dollar. These underweight positions in particular contributed positively to returns - adding 4% to Templeton Global Bond Fund's performance and 2.5% to Templeton Global Total Return Fund's performance relative to their respective benchmarks as a risk premium.4

We believe certain emerging market currencies are undervalued relative to their fundamental strength

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Mexican Peso

  • We expect strengthening of the peso on strong fundamentals, higher international reserves compared to the pre-crisis period along with the flexible credit line from the IMF
  • The central bank has strong independence, and a track record of creditability and orthodox policy responses
  • Economic growth and fiscal balances remain fundamentally sound

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Indonesian Rupiah

  • Growth has remained strong while the country has demonstrated continued resilience to external shocks
  • The country has implemented a deep and ambitious structural reform program over the past decade to strengthen its economic fundamentals, balance growth, and accelerate development goals
  • Debt levels have come down significantly since the Asian Financial Crisis

Our positioning in sovereign credit is driven by research, not the benchmark

Our global strategies can capitalize on differing business cycles and economic conditions around the world. We believe compelling income opportunities are now available globally, especially in emerging markets.

Security selection is often key to taking advantage of such opportunities. For example, the prospect for higher returns in many Latin American economies has increased in recent months - many countries are turning away from populism and are taking more pro-market and fiscally conservative approaches.

Select of Government Bond Yields (%)
As of 31 March 2019
Map

Past performance is not an indicator or a guarantee of future performance. Chart is for illustrative and discussion purposes only.
Source: Bloomberg. Government Yields are based on an aggregate of all government bonds held in each country consituent. All yeilds are based on yeild to maturity.

Why Global Fixed Income?

What does global fixed income have to offer today's investors?

A larger opportunity set

  • The bond market has notably increased in recent years
  • The variety and liquidity of the bonds available has never been greater
  • Investors can look beyond the traditional capital markets of the United States, Europe and Japan

Diversification opportunities

  • Bonds can potentially provide positive returns when equity markets are falling
  • Bond markets don't perform as one - shrewd investors can take advantage of differing economic and business cycles around the world

Potentially attractive risk/return features

  • Historically, global fixed income has seen some of the best risk/return characteristics of any asset class

Why Franklin Templeton?

  • We were pioneers in unconstrained fixed income investing when we launched the Templeton Global Bond Strategy in 1986
  • We can draw on the breadth of our global resources across the Americas, Europe and Asia
  • Our mission is to provide specialized expertise with a truly global perspective