The fund is offering UK investors access to its $900m (£649m) flexible alpha bond funds, currently only available to US and Luxembourg registered investors.
It will be managed by David Yuen and Michael Materasso, senior vice presidents and portfolio managers of the Franklin Templeton fixed income group.
Investing primarily in fixed and floating rate debt securities and related derivatives, it aims to provide an absolute return, through a combination of income and capital growth each calendar year.
The firm said the fund, which is benchmark-unconstrained, intends to provide an overall return of 2-3% above Libor. This would be over a full market cycle of three-to-five years, after management fees are deducted.
Additionally, the strategy aims to maximise risk-adjusted returns while minimising drawdowns.
Alex Brotherston, head of UK retail sales, said: “We’ve seen a growing demand for outcome investing as investors look for alternatives to traditional fixed income mandates that don’t rely solely on interest rate movements for performance.
“We believe this fund will appeal to investors who are looking to diversify and complement the core fixed income portion of their portfolios, whilst accessing pure alpha and hedging their portfolios to mitigate downside volatility which is inherent in long-only strategies.”
He said the fund offers “a flexible mandate that brings diversification to both the returns and risk profile of an investor’s fixed income allocation”.
Yuen added: “We are excited to bring this strategy to UK investors and offer an unconstrained, risk focused approach where volatility is managed.
“Our investment process leverages the in-depth knowledge of our experienced fixed income teams globally and our approach with dynamic sector rotation, active currency management, security selection and relative value positioning, while aiming to manage risks such as duration.”
The announcement follows the launch of the Templeton Emerging Markets (EM) Local Currency Bond fund last week.
