The Luxembourg-registered fund will be managed by David Zahn, head of European fixed income and lead portfolio manager and Rod McPhee, research analyst and portfolio manager.
With an aim of preserving capital and liquidity looking across the European high-quality, short-duration universe, the fund will invest in short-dated and floating rate debt securities that are rated investment grade or equivalent.
It has the flexibility to invest beyond the eurozone and may also turn to securitised debt and certain financial derivative instruments including index-based derivatives, CDS and currency forwards.
In addition, European short-duration securities offered good diversification benefits through their low correlation with the other major asset classes.
The group said the breadth of instruments used within the multi-sector, value-based portfolio has the potential to generate the most attractive risk/return profile over a full market cycle.
Zahn said: “We believe it is an opportune time to launch this fund as European short duration securities provide portfolio insulation and opportunity for enhanced return in rising rate environments. We find that European short duration fixed income is a growing sector as investors are continuing to seek yield with some level of protection from interest rate risk.”
Jamie Hammond, managing director, Europe at Franklin Templeton Investments said the fund would fill a “natural product gap” in the range and was launched to meet investor demand.
“The launch marks the latest step in our initiative to promote our European fixed income capabilities, in recognition of strong institutional and retail client demand for dedicated European fixed income strategies,” he added.
