Franklin Templeton overhauls UK-based fund range
Franklin Templeton is closing two funds and merging two others, following a review of its UK-domiciled product range.
The group is shutting the four funds to focus on having only ‘core’ products based in its UK Oeic umbrella under the overhaul, which takes effect on May 31.
It is also closing funds to avoid duplication with existing products housed in its Luxembourg-based Sicav.
The bottom-quartile £5.2m Templeton UK Equity fund and the average-performing £12.2m Franklin US Equity fund are being merged away, while the £5.9m Franklin Global Reit fund of real estate investment trusts (Reits) and £11.8m Franklin Biotechnology fund are closing.
The decision to shut the funds follows a review that began when the US-owned asset management giant bought Rensburg Fund Management in late 2010, in a move that saw it take on six funds.
Franklin Templeton head of UK, Ian Wilkins, said: “Where it makes sense we are reducing duplication between the Sicavs and the Oeics. There are certain things which are core to the UK market, and biotech and Reits are not core.”
The Templeton UK Equity fund is being merged into the £31m Franklin UK Managers’ Focus fund, a former Rensburg fund managed by Franklin Templeton’s four lead UK equity managers Paul Spencer (pictured), Colin Morton, Stuart Sharp and Mark Hall.
Mr Wilkins said the Templeton UK Equity fund was originally a “carve-out” from a global equity strategy run by four managers based in the UK and Canada, but it failed to gain traction in the UK - making it “not economically viable”.
The Templeton UK Equity fund’s performance has been bottom-quartile, according to Morningstar data. In the past five years it lost 28.4 per cent, ranking it 244 out of 250 rival products in the IMA UK All Companies sector. The Franklin UK Managers’ Focus fund’s 7.1 per cent gain ranks it a second-quartile 76 out of 250 funds over the timescale.
Franklin Templeton is also merging the Franklin US Equity fund, run by Kent Shepherd in California, into Grant Bowers’ £9.8m Franklin US Opportunities fund. The two funds will continue to operate separately within the Luxembourg Sicav.
In the past five years the Franklin US Equity fund gained 26.3 per cent, almost exactly in line with an average 26.7 per cent gain from funds in the IMA North America sector. The Franklin US Opportunities fund does not yet carry a five-year track record, but over the past three years its 75.3 per cent gain ranks it a top-quartile five out of 83 peers in the sector.
The closing funds - Franklin Global Reit, which is run by New York-based David Levy, Jack Foster and Wilson Magee, and Franklin Biotechnology, which is run by Evan McCulloch - are based on strategies which will continue to be accessible to UK clients of the Luxembourg Sicav.