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Franklin Templeton Multisector Bond W Fund Commentary September 30, 2023

The Fund invests in primarily global fixed income securities and debt obligations of government and government related and corporate issuers worldwide. The Fund can also invest in securities linked to assets and currencies of any nation, as well as derivatives.

A professionally managed active portfolio seeking to maximise total investment returns through an unconstrained approach to security selection, duration positioning and currency exposure.

A fundamental research-driven investment approach that integrates global macroeconomic analysis with in-depth country research to identify and exploit long-term economic imbalances.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

Product Overview
Performance Review
Peer Comparison
Product Details

Product Overview

Fund Name	APIR Code ? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.	Structure ?	Asset Class ? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.	Asset Category ? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.	Peer Benchmark Name ? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.	Broad Market Index ? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.	FUM ? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.	Management Fee ? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.	Performance Fee ? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.	Spread ? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Franklin Templeton Multisector Bond W	FRT0011AU	Managed Funds	Fixed Income	Multi-Strategy Income	Fixed Income - Multi-Strat Income Index	Global Aggregate Hdg Index	141.12 M	0.85%	0.00%	0%

Performance Review

Fund Name	Last Month ? Returns after fees in the most recent (last) month).	3 Months Return ? Returns after fees in the most recent 3 months.	1 Year Return ? Trailing 12 month returns.	3 Years Average Return ? Average Annual returns from the last 3 years.	Since Inc. Average Return ? Average (annualised) returns since inception	1 Year Std. Dev. (Annual) ? The standard deviation (or annual volatility) of the last 12 months.	3 Years Std. Dev. (Annual) ? The average standard deviation (or annual volatility) from the last 3 years.	Since Inc. Std. Dev. (Annual) ? The average standard deviation (or annual volatility) since the fund inception.	1 Year Max Drawdown ? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	3 Year Max Drawdown ? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	Since Inc. Max Drawdown ? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Franklin Templeton Multisector Bond W	1.35%	-2.17%	3.42%	-5.89%	2.63%	11.72%	12.43%	9.57%	-9.16%	-25.2%	-34.79%

Peer Comparison

Fund Name	Peer Index Name ? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.	12 Months Excess Return ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	Excess Return Annualised Since Inception ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	12 Months Alpha ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	Alpha Annualised Since Inception ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	12 Months Beta ? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	Beta Annualised Since Inception ? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	12 Months Tracking Error ? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	Tracking Error Since Inception ? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	12 Months Correlation ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.	Correlation Since Inception ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Franklin Templeton Multisector Bond W	Fixed Income - Multi-Strat Income Index	-2.85%	-2.62%	NA%	NA%	NA%	3.04	9.24%	6.96%	0.89	0.75

Product Details

Fund Name	Verifed by SMSF Mates	Manager Address	Phone	Website	Email
Franklin Templeton Multisector Bond W	Yes		-	https://www.franklintempleton.com.au/	-

Product Due Diligence

What is Franklin Templeton Multisector Bond W

Franklin Templeton Multisector Bond W is an Managed Funds investment product that is benchmarked against Global Aggregate Hdg Index and sits inside the Fixed Income - Multi-Strat Income 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 Franklin Templeton Multisector Bond W has Assets Under Management of 141.12 M with a management fee of 0.85%, a performance fee of 0.00% and a buy/sell spread fee of 0%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Franklin Templeton Multisector Bond W has returned 1.35% in the last month. The previous three years have returned -5.89% annualised and 9.57% each year since inception, which is when the Franklin Templeton Multisector Bond W 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 Franklin Templeton Multisector Bond W first started, the Sharpe ratio is NA with an annualised volatility of 9.57%. The maximum drawdown of the investment product in the last 12 months is -9.16% and -34.79% 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 Franklin Templeton Multisector Bond W has a 12-month excess return when compared to the Fixed Income - Multi-Strat Income Index of -2.85% and -2.62% 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. Franklin Templeton Multisector Bond W has produced Alpha over the Fixed Income - Multi-Strat Income Index of NA% in the last 12 months and NA% since inception.

What are similar investment products?

For a full list of investment products in the Fixed Income - Multi-Strat Income Index category, you can click here for the Peer Investment Report.

What level of diversification will Franklin Templeton Multisector Bond W provide?

Franklin Templeton Multisector Bond W has a correlation coefficient of 0.75 and a beta of 3.04 when compared to the Fixed Income - Multi-Strat Income 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 Franklin Templeton Multisector Bond W and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Franklin Templeton Multisector Bond W with the Global Aggregate Hdg Index?

For a full quantitative report on Franklin Templeton Multisector Bond W compared to the Global Aggregate Hdg Index, you can click here.

Can I sort and compare the Franklin Templeton Multisector Bond W to do my own analysis?

To sort and compare the Franklin Templeton Multisector Bond W financial metrics, please refer to the table above.

Has the Franklin Templeton Multisector Bond W 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.

How can I invest in Franklin Templeton Multisector Bond W?

If you or your self managed super fund would like to invest in the Franklin Templeton Multisector Bond W please contact via phone or via email .

How do I get in contact with the Franklin Templeton Multisector Bond W?

If you would like to get in contact with the Franklin Templeton Multisector Bond W manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Franklin Templeton Multisector Bond W. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - June 30, 2023

A professionally managed active portfolio seeking to maximise total investment returns through an unconstrained approach to security selection, duration positioning and currency exposure.

A fundamental research-driven investment approach that integrates global macroeconomic analysis with in-depth country research to identify and exploit long-term economic imbalances.

Performance Commentary - September 30, 2022

Market Review:
• Tightening monetary policy continued to be a dominant theme in the third quarter of 2022. Following a brief respite in July, sovereign bond yields continued their upward trend across much of the world as central banks embarked on or accelerated policy rate hikes to curb inflation.
• The US Federal Reserve continued the hiking cycle it had started in March, raising the fed funds target rate by 75 basis points (bps) at both of its July and September meetings, bringing the fed funds target rate to 3.00%–3.25%. US Treasury (UST) yields also surged to multi-year highs during the period. The 10-year UST yield rose 82 bps to 3.83% over the quarter. The shorter end of the curve bore the brunt of changed rate expectations and saw the two-year UST yield rise by 132 bps to 4.28%.
• A pause in the US dollar’s upward march in July proved short-lived, and it strengthened further against almost all developed and emerging market currencies during the third quarter.

Performance Review:
• In the third quarter of 2022, currency positions detracted from the portfolio’s absolute performance, as did overall credit exposures. Interest-rate strategies contributed to absolute results.
• Amongst currencies, positions in the South Korean won, Japanese yen, Chinese yuan, Thai baht, Indian rupee, Ghanaian cedi, Colombian peso, Argentine peso and Brazilian real detracted from the portfolio’s absolute performance.
• Amongst credit exposures, subinvestment-grade sovereign credits detracted from the portfolio’s absolute return.
• The portfolio maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Duration exposures in Argentina and Brazil contributed to absolute results.

Performance Commentary - June 30, 2022

• In the second quarter of 2022, currency positions detracted from the portfolio’s absolute performance, as did overall credit exposures and interest-rate strategies.
• Positions in the South Korean won, Chilean peso, Argentine peso, Brazilian real, Chinese yuan, Colombian peso, Indian rupee, Indonesian rupiah, New Zealand dollar and Ghanaian cedi against the USD detracted from the portfolio’s absolute results, as did positions in the Norwegian krone and Swedish krona against the euro. However, its position in the Canadian dollar against the euro contributed to absolute performance.
• The portfolio maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Duration exposures in Argentina and Ghana detracted from absolute results.
• Subinvestment-grade sovereign credits detracted from the portfolio’s absolute return.

Performance Commentary - March 31, 2022

• In the first quarter of 2022, currency positions detracted from the portfolio’s absolute performance. Interest-rate strategies contributed to absolute results, as did overall credit exposures.
• Positions in the Russian ruble, Ghanaian cedi, South Korean won and Japanese yen detracted from absolute performance. We closed our position in the Russian ruble in March. We also exited our position in the Japanese yen, primarily due to the expected depreciation pressures on the currency from widening rate differentials with the US. Positions in the Brazilian real, Chilean peso and Colombian peso against the USD contributed to absolute results, as did the portfolio’s positions in the Norwegian krone and Canadian dollar against the euro.
• The portfolio maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Duration exposures in Argentina and Ghana contributed to absolute performance.
• Subinvestment-grade sovereign credits contributed to the portfolio’s absolute return.

Performance Commentary - June 30, 2021

In the second quarter of 2021, interest-rate strategies contributed to the portfolio’s absolute performance, followed by overall credit exposures. Currency positions detracted from absolute results.

• The portfolio maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Select duration exposures in Latin America (Argentina), Africa (Ghana) and Asia ex Japan (Indonesia) contributed to absolute performance.

• Subinvestment-grade sovereign credits contributed to the portfolio’s absolute return.

• Currency positions in Latin America detracted from absolute results (the Argentine peso detracted, while the Brazilian real contributed. However, the portfolio’s positions in the Chinese yuan and the Russian ruble contributed to absolute performance.

Performance Commentary - December 31, 2020

In the fourth quarter, currency positions contributed to the portfolio’s absolute performance, followed by interest-rate strategies. Overall credit exposures had a largely neutral effect on absolute results. In currency markets, the USD broadly weakened against major developed market and emerging market currencies alike during the quarter. Positions in northern European currencies (the Norwegian krone and Swedish krona) contributed to absolute performance, as did the portfolio’s net-positive positions in the Japanese yen and the Swiss franc.

We expect the Japanese yen to appreciate against the USD in upcoming months given Japan’s strong external balance. Currency positions in Asia ex Japan (the Indonesian rupiah) and Latin America (the Colombian peso) also contributed to absolute performance. However, the portfolio’s net-negative position in the euro detracted from absolute results, as did its tactical positioning (negative) in the Mexican peso. We continue to expect the euro to weaken against the USD given negative rates, as well as greater headwinds to growth and reflation efforts in Europe. Sovereign bond yields declined in much of core Europe, Latin America and Asia, notably Brazil, Mexico, Colombia, Indonesia and India. The portfolio maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Select duration exposures in Latin America (Argentina and Mexico) contributed to absolute performance.

On the duration front, we continue to see value in specific local-currency emerging markets, specifically in countries with domestically driven economies that are less vulnerable to external shocks. The portfolio’s Australian-dollar hedge functioned as designed during the quarter, providing Australian investors with a return in Australian dollars (AUD) that approximates the return a US investor would receive in US dollars. Since the AUD appreciated 7.68% against the US dollar during the quarter, the hedge into AUD had a positive effect for AUD-based investors. The AUD appreciated 9.88% against the US dollar for the one-year period ended 31 December 2020.

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Franklin Templeton Multisector Bond W (FRT0011AU) Report & Performance