Franklin Templeton has made a foray into the UK fixed income market with the launch of two lower-cost bond portfolios.
The asset manager has added to its Oeic range, which currently includes strategic and global bond offerings, with the launch of the Franklin UK Gilt and UK Corporate Bond funds.
The gilt fund carries an ongoing charges figure (OCF) of 0.35 per cent, while the corporate bond offering, which focuses primarily on the investment-grade space, has an OCF of 0.45 per cent.
The average OCF for an active fund in the sterling corporate bond sector is almost 0.6 per cent, according to FE Analytics.
Franklin Templeton’s head of European fixed income David Zahn, who will run the funds with Roderick MacPhee, said the move into the UK market would build on its offshore European offering.
“We have built a successful range in Europe and felt that the track record was there to bring to bear in the UK,” he said.
Asked about the timing of the launches, Mr Zahn said yields on UK corporates remained attractive relative to those in other developed economies.
He backed active exposures to UK sovereign debt to prosper despite the sell-off seen at the end of last year. Benchmark 10-year gilt yields have risen from 0.7 per cent to 1.2 per cent in the past four months, and briefly moved above the 1.5 per cent mark in January.
“The market volatility presents the opportunity for active managers in an asset class that has been passively managed in many cases,” Mr Zahn said.
