Franklin Templeton Investments has launched a fund investing in investment grade sovereign debt globally and, on an ad hoc basis, in below investment grade emerging market sovereign debt.
The Franklin Templeton Investment Funds Franklin Global Government Bond Fund will be co-managed by John W. Beck, co-director of the global fixed income department, and David Zahn, vice president and head of European fixed income.
Beck and Zahn say they seek to maximise total investment returns consisting of a combination of interest income and capital appreciation by investing in fixed or floating-rate debt securities and obligations issued by government and government-related entities globally.
Opportunistically, they will also allocate to corporate and mortgage-backed securities as well as below investment-grade securities and obligations issued by emerging market governments.
By concentrating on highly rated government securities, the duo says the fund has been designed to offer investors a source of portfolio stability and diversification.
Investment grade sovereign bonds, they say, have historically shown little correlation with other major asset classes and tend to behave with lower levels of volatility when compared with high yield issues.
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