| Fund Company | Franklin Templeton Investments |
| Fund Type | Global Neutral Balanced |
| Rating | B |
| Style | Value |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Lisa Myers since December 2005
Michael Hasenstab since August 2006 |
| MER | 2.48% |
| Code | TML 3240 – Front End Units
TML 3242 – DSC Units |
| Minimum Investment | $500 |
Analysis: This fund really struggled in the first few years after it was launched in Canada, trailing most other global balanced funds between 2009 and 2011. However, in mid-2012, performance turned the corner, and since then, this has been one of the strongest performing global balanced funds available.
The equities are managed by Lisa Myers using Templeton’s trademark value focused stock selection process. She and the global equity team scour the global equity universe looking for well-managed, high quality companies that are out of favour with investors, and are trading well below their estimate of its true worth.
The fixed income sleeve is managed by Michael Hasenstab who is part of the highly regarded Templeton global bond team. The team analyzes interest rates, currencies and yield spreads to help identify the right bond mix for the investing climate. The portfolio is heavily tilted towards corporate bonds. They remain cautious given the current rate outlook, and do not believe that investors are being adequately compensated for the additional risk of moving further out the yield curve.
Franklin Templeton’s fixed income and equity teams meet regularly to set the asset mix based on where they are finding the most attractive opportunities. They have a great deal of flexibility and can have between 25% and 75% of the fund invested in either equities at any given time. The current mix heavily favours equities, which make up two-thirds of the fund.
Recent performance has been stellar, delivering twice the returns of the average tactical balanced fund in 2012 and 2013. For the five years ending March 31, it posted an impressive 10.6% annualized gain, which while lagging the benchmark, managed to handily outpace the majority of its peers.
While performance has been strong, the fund’s volatility has also been above average. It has a level of volatility that is significantly higher than the benchmark, and its peer group. In fact, its standard deviation is only slightly lower than the MSCI World Index, making this one of the higher risk balanced fund offerings out there.
Like other Templeton funds, and as we saw in 2009 to 2011, there may be periods where the performance lags. Still, if you can stomach the higher risk, are patient, and have a longer term time horizon, I believe you will see an above average return through this fund.