Franklin Templeton India to launch a feeder into European Growth Fund

The fund will invest into the Luxembourg-domiciled Franklin European Growth Fund

April 22, 2014 3:09 IST | India Infoline News Service
Franklin Templeton Investments (India) is launching an open end fund-of-funds scheme called Franklin India Feeder–Franklin European Growth Fund (FIF-FEGF). The fund will invest into the Luxembourg-domiciled Franklin European Growth Fund (underlying fund), an overseas equity fund which primarily invests in securities of issuers incorporated or having their principal business in European Countries. Launched in December 2000, the underlying fund looks to invest in European companies across market-cap and sectors that can potentially generate alpha through various economic cycles by focusing on undervalued high-quality, financially robust companies with limited downside risk. The New Fund Offer will be open from April 25, 2014 to May 09, 2014 during which units will be available at Rs.10 per unit.
Speaking about the rationale for launching the fund, Vivek Kudva, Managing Director, India and CEEMEA, Franklin Templeton Investments said, “International diversification is a key ingredient for long-term success of an investment portfolio, but Indian investors have traditionally had low exposure to funds investing overseas. This is however starting to change and we are seeing increased acceptance of our international range of funds – for example, our FT India Feeder – Franklin US Opportunities Fund has witnessed good response and assets under management have increased from Rs. 104 crore at the time of its launch to around Rs. 758 crore as of March 2014.”
“Europe constitutes 24% of the world’s GDP and several European companies have demonstrated strong competitive advantage and global presence in sectors such as engineering, pharmaceuticals and consumer goods. With 34% of the world's trade generated through Europe, this region remains one of the largest players and an excellent region to do business with. Adding an international fund with exposure to European companies to the portfolio can help investors reduce the potential portfolio risk over the medium to long term.” Kudva added.
Speaking about Franklin European Growth Fund’s strategy Michael Clements, CFA, Portfolio Manager, Analyst, Franklin Templeton Investments, commented, “With economic recovery gaining traction in Europe, corporate earnings are poised to show improvement. Like the U.S., many European companies have a global presence and will benefit from a synchronized recovery at home and abroad. While European equities have posted strong gains over the past year, valuations remain attractive in numerous pockets. Our bottom-up, long-term approach helps screen out unsustainable businesses and focus on high quality companies which demonstrate strong and sustainable competitive advantages, have solid balance sheets and are available at a reasonable price. We tend to be contrarian in our style, and our philosophy and process often lead us to segments of the market that are out of favour with other investors.”

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