Franklin Templeton Launches Flexible Alpha Bond Fund
By DailyAlts Staff Market pundits are nearly unanimous in their assessment that bonds are unlikely to deliver returns in the future that fixed-income investors became accustomed to in the past. For some, this means getting out of fixed income altogether – for others, a “flexible” approach holds promise. Investors in the latter camp have a new option as of August 3: the Franklin Flexible Alpha Bond Fund (MUTF: FABFX ). The new fund, which is managed by Franklin Templeton Investments, is designed to provide attractive risk-adjusted total returns over a full market cycle. The fund’s managers pursue this end by means of allocating the fund’s portfolio across a broad range of global fixed income sectors and risks, such as credit, currency, and duration. In pursuing this strategy, the fund’s managers have the flexibility to capitalize on opportunities across national borders, market sectors, credit grades, and bond maturities and durations, without reference to a benchmark index. “Given the recent concerns with respect to rising interest rates and the related desire for additional diversification in the fixed income markets, we believe Franklin Flexible Alpha Bond Fund should fulfill investors’ rapidly growing demands for an alternative to traditional core fixed income allocations,” said Michael Materasso, co-lead manager of the fund and senior VP of the Franklin Templeton Fixed Income Policy Committee. In a recent statement, Mr. Materasso also noted the fund’s diversification benefits: “The fund seeks to complement traditional fixed income asset classes by potentially providing low correlation to conventional holdings.” Mr. Materasso manages the Franklin Flexible Alpha Bond Fund alongside fellow co-manager David Yuen. Together, the pair employ their 68 years of combined industry experience in a “top down” analysis of macroeconomic trends and a “bottom up” fundamental analysis of individual opportunities. Positions may be held long or short to navigate market cycles and tactically manage risks from interest rate, credit, currency and country exposures. “We take an unconstrained investment approach with dynamic sector rotation, active currency management, security selection and relative value positioning, while aiming to manage various risks, such as duration,” said Mr. Yuen. Under normal circumstances, at least 80% of the fund’s net assets will be invested in bonds and other instruments that provide exposure to bonds. The fund’s weighted average portfolio duration may range from -2 to +5 years. Shares of the fund are available in A (FABFX), C (MUTF: FABDX ), R (MUTF: FABMX ), R6 (MUTF: FABNX ), and Advisor (MUTF: FZBAX ) classes, with net expense ratios ranging from a low of 0.71% for R6 shares to a high of 1.50% for C-class shares. For more information, download a pdf copy of the fund’s prospectus .