Templeton has consistently applied its value driven investment philosophy since the 1940s and the Templeton Global Equity Fund invests in global equities which are considered undervalued based on fundamental analysis. This provides global diversification to an overall portfolio as well as access to a large opportunity set. In-depth research gives the Fund managers the conviction to purchase out-of-favour securities and patience to wait for value recognition.
Performance Review
• Stock selection in the information technology sector contributed significantly to relative fund performance. Security selection and an underweighting in the consumer staples sector also enhanced results, as did stock selection in the financials sector.
• Conversely, security selection in the materials sector detracted from relative performance. Stock selection and an underweighting in the energy sector also hampered results, as did security selection in the consumer discretionary, industrials and health care sectors.
• Regionally, stock selection in Japan contributed to relative performance during the first quarter of 2021. Security selection in the United States also enhanced results, as did stock selection and an underweighting in China. In contrast, stock selection in Canada detracted from relative performance. Security selection and an overweighting in Germany also hampered results, as did stock selection in France and Switzerland.
What is Templeton Global Equity Templeton Global Equity is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Large Value Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Templeton Global Equity has Assets Under Management of 43.55 M with a management fee of 0.2%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Templeton Global Equity has returned -3.44% in the last month. The previous three years have returned 1.11% annualised and 12.44% each year since inception, which is when the Templeton Global Equity first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Templeton Global Equity first started, the Sharpe ratio is 0.19 with an annualised volatility of 12.44%. The maximum drawdown of the investment product in the last 12 months is -18.33% and -42.21% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Templeton Global Equity has a 12-month excess return when compared to the Foreign Equity - Large Value Index of -11.01% and -1.52% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Templeton Global Equity has produced Alpha over the Foreign Equity - Large Value Index of -0.85% in the last 12 months and -0.14% since inception.
What are similar investment products? For a full list of investment products in the Foreign Equity - Large Value Index category, you can click here for the Peer Investment Report.
What level of diversification will Templeton Global Equity provide? Templeton Global Equity has a correlation coefficient of 0.96 and a beta of 1.18 when compared to the Foreign Equity - Large Value Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Templeton Global Equity and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Templeton Global Equity with the Developed -World Index? For a full quantitative report on Templeton Global Equity compared to the Developed -World Index, you can click here.
Can I sort and compare the Templeton Global Equity to do my own analysis? To sort and compare the Templeton Global Equity financial metrics, please refer to the table above.
Has the Templeton Global Equity been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Templeton Global Equity. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - December 31, 2020 Performance Review
• Stock selection and an overweighting in the information technology sector contributed significantly to relative fund performance. Security selection and an overweighting in the materials sector also enhanced results, to a lesser extent, as did stock selection in the communication services and consumer discretionary sectors.
• Conversely, stock selection and an underweighting in the energy sector detracted from results. An underweighting in the financials sector also detracted from relative performance during the fourth quarter.
• Regionally, stock selection in the United States contributed significantly to relative performance during the fourth quarter. Security selection in Japan also enhanced results, as did overweighting and stock selection in South Korea and Taiwan. Relative returns were supported further by stock selection in Denmark and Germany. In contrast, security selection in Canada detracted from relative performance. Security selection in India and France also hampered results.
Outlook & Strategy
While we are encouraged by recent vaccine developments and generally optimistic about their implications, much of the good news seems discounted by expensive valuations. Low interest rates may justify high valuations, but if the combination of stimulus and vaccination succeeds in reflating the global economy, rates should move higher, at least in nominal terms. Governments burdened by debts they can never pay back cannot afford to let interest costs spike, leading us to expect continued state intervention into financial markets and the economy, with all the distortions that implies for pricing signals. The era of free markets and liberal democracy as we once knew it is likely over, in our view. The modern policy goal of engineering a permanent recovery will prove impossible. Yet, even if it were not, the question remains: recovery to what?What are sustainable levels of demand in an economy buffeted by the major structural forces of deglobalisation, ageing demographics, accelerating technology adoption and permanent government intervention? We expect the push and pull between inflationary and deflationary forces to accelerate, cycles to compress and growth to be harder to come by. That certainly didn’t seem to be the case in 2020, when policymakers papered over a global catastrophe and managed to keep the party going. The frenzy was evident not just in valuations, but also in the amount of capital raised by blank-check firms and oversubscribed IPOs (initial public offerings), as well as the sudden retail rush into the stock market. Improved political clarity, continued stimulus and herd immunity may become logical justifications for more of the same in 2021. Or it may simply be a “buy the rumour, sell the news” event. Either way, it can’t go on forever…but nor can we sit on the sidelines and wait for it to end. Our continued efforts towards diversifying and upgrading the quality of the portfolio are intended to help us succeed in the challenging environment ahead. After all, uncertainty can be favourable for active investment managers with a long-term horizon and global opportunity set. We are applying all our energies and talents to uncovering what we view as the best ideas in this environment and getting them into a sensible and balanced portfolio suitable for a future of increasing adversity and complexity.
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