Templeton Global Ttl Ret I(Ydis)EUR |
Morningstar's Take
|26/08/2024by Saraja Samant
| This seasoned team’s ambitious approach sports considerable risk, overwhelming its strengths. Lead manager Michael Hasenstab pioneered the team’s distinctive process and stands at the helm of Franklin Templeton’s global macro suite of strategies. Longtime analyst and co-head of research Calvin Ho has served as comanager since 2018, and a solid macro analyst team supports the two. This support team has recently seen some turnover but continues to boast deep global expertise and experience in navigating difficult market environments. Thorough global rates and currency research underpins the strategy’s high-conviction, long-term approach. In line with the team’s macro views, the strategy has emphasized exposure to emerging-markets debt for much of the past decade, though it added developed-markets duration starting in early 2023 to reap the benefits of higher interest rates. Hasenstab and his team have always embraced concentration and have been willing to back their views to the hilt. This benchmark-agnostic differentiated approach makes the fund stand out, though in practice the team has not always managed the flexibility well. The level and complexity of risk have increased in recent years. That has included a short on US Treasuries from 2016 to early 2020, which led to a negative overall duration, ample concentration among its emerging-markets local bond positions, and aggressive currency positions that can be susceptible to prolonged periods of fickle markets. Missteps have stung in recent years, including the disappointing US Treasury short (removed in early 2020), a heavy focus on highly volatile Latin American debt, and long Japanese yen exposure. Anticipating more market turmoil after 2020’s first quarter’s coronavirus-driven selloff, the team kept a relatively conservative posture and missed on a bargain buying opportunity, which was disappointing. Citing slowing economic growth and thus stretched US dollar valuations, the team made a large bet against the US dollar, mainly in favor of Asian currencies, starting in the second half of 2022 that has continued to hamper performance. To be sure, the team’s long-standing aversion to developed-markets duration was ultimately rewarded as yields rose sharply throughout 2022, but pronounced currency bets on the Ghanaian cedi, Russian ruble, and Argentine peso stung. The strategy still outperformed its Bloomberg Multiverse Index in 2022 but did so with much higher volatility. The team’s proclivity to risk has led to a bumpy ride for investors and hampered long-term performance. The strategy’s 10-year risk-adjusted return (as measured by Sharpe ratio) is the worst in its Morningstar Category. |
Not worth the risk.To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | Above Average |
| Parent | Average |
| Process | Below Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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