California-based asset manager Franklin Templeton has launched two enhanced equity funds, one focussed on global equities and the other on US stocks.
The funds are the firm’s first systematic equity products to integrate the fundamental research insights of the firm’s most prominent active investment managers. The approach is designed to be scalable across asset classes and product wrappers.
Both funds are actively managed, and will seek to deliver above market returns, while maintaining smaller deviation (tracking error) from core indices, a risk management approach that may be beneficial for many client portfolios. The funds are classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR)3, and will be registered for sale in Germany, Italy, Spain, Switzerland and the United Kingdom.
Matt Harrison, Head of Americas (ex-US), Europe & UK, said : “The Franklin Core Enhanced Equity funds are effective building blocks for today’s portfolios. Designed to fill the gap between traditional active and passive equity strategies, these lower-cost products’ tightly controlled tracking error can help investors aim for more consistent outperformance against the index. With the additional insights from our active fundamental managers, we are excited to offer this differentiated core building block option to our clients.”
The funds pursue an actively managed, quantitative process to dynamically invest in equity securities while keeping the expected level of tracking error between 1- 2% in normal market conditions. The funds employ a proprietary quantitative selection process using a multi-factor model to assign a weighted score across quality, value, sentiment and alternatives factors. The process also incorporates an alpha score derived from the proprietary signals and insights of Franklin Templeton’s Specialist Investment Managers.
Designed to be a foundational equity allocation, the Franklin Core Enhanced Equity funds are sector, industry and factor neutral, with the global portfolio also offering diversified exposure across major regions.
