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Bond fund losses continue for Franklin Templeton

Three Franklin Templeton bond funds suffered more than €800m of outflows in January, according to Morningstar data.


Sam Shaw

The Franklin Upper Tier Floating Rate, Templeton Global Bond and Templeton Global Total Return funds contributed to the group’s €869m outflows in the first year of the month.

The losses were in contrast to the wider asset class; bond funds took in the most assets in January, with €16.86bn.

Outflows from the US-based fund group’s fixed income funds have been unstemmed since January 2015, totalling €31.4bn, of which €26.3bn came out of Templeton Global Bond and Templeton Global Total Return.

On the flipside, M&G’s Optimal Income saw a turnaround in its fortunes.

Richard Woolnough’s fund was “caught off guard by bond yields tanking even more in the wake of the European Central Bank’ s quantitative easing programme, which kicked in in the first quarter of 2015,” Ali Masarwah, director of EMEA editorial research at the ratings agency, said.

Masarwah added that following two years of huge outflows, the silver-rated fund saw inflows of €453m in January.

“The fund’s short duration served investors well when yields rose sharply in the fourth quarter of 2016.”

Standard Life Investments (SLI) followed Franklin Templeton in the league table outflows, with €682m – €677m of which was solely from SLI Global Absolute Return Strategies (GARS).

Morningstar said January seemed to reflect the reflation trade, as long-term funds posted their highest monthly inflows since July 2015.