Fixed Income  

Franklin Templeton launches short-duration bond fund

The Franklin Euro Short Duration Bond Fund will invest in both sovereign and corporate bonds of investment-grade quality issued in the eurozone.

It will also draw on derivatives, including credit default swaps and currency forwards, as well as securitised debt, to achieve its target.

David Zahn, Franklin Templeton’s head of European fixed income and lead portfolio manager, and Rod MacPhee, research analyst and portfolio manager in the fixed income division, will manage the fund.

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Mr Zahn said: “We find that European short-duration fixed income is a growing sector as investors are continuing to seek yields with some level of protection from interest rate risk.”

The warning against interest rate risk struck a chord with Darius McDermott, who said that continuing suppression of interest rates among central banks had “cost investors dearly” if they relied on cash returns.

The managing director of London-based Chelsea Financial Services revealed that almost all (98 per cent) of funds had beaten returns on cash in the past five years, and even funds with a higher emphasis on safer assets performed well.