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Franklin Templeton launches social bond fund for European investors

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Franklin Templeton has launched the Franklin European Leaders Bond Fund, a sub-fund of its Luxembourg-domiciled Franklin Templeton Investment Funds (FTIF).

It be registered in 20 countries, including Germany, France, Italy, Spain, Switzerland, and the UK. With this latest addition, the European fixed income team has grown its sustainable offering to six Article 8 and two Article 9 funds.

David Zahn, head of European fixed income, said: “We are delighted to add this new fund to our growing portfolio of sustainable fixed income solutions. Couple this with the fact that Europe is the largest and most advanced social bond market globally and continues to experience rapid growth, this strategy will give investors access to a wide range of attractive social bonds and the opportunity to support investments geared towards creating societal benefits.”

The firm said that the fund’s investment objective is to deliver positive social outcomes by promoting social equality. The new fund aims to achieve a total return of income and capital growth by investing predominantly in a portfolio of social bonds.

It principally invests in euro-denominated investment grade bonds worldwide and targets entities mainly involved in socially sustainable activities, including those linked to the United Nations Sustainable Development Goals, including No Poverty, Zero Hunger, Clean Water and Sanitation, and Decent Work and Economic Growth.

The portfolio management team believes the biggest source of alpha will come from active security selection, duration management and sector allocation.

Zahn added: “Given recent events and the growing emphasis on environmental aspects of sustainable investing, investors are increasingly interested in addressing the S in ESG. Launching this new fund now is a timely opportunity to bring a distinct strategy to the market and broaden our product offerings catering to societal wellbeing. In addition, a portfolio of actively managed social bonds can provide an attractive source of risk-adjusted returns while providing liquidity to new and existing projects contributing to positive social outcomes. This new fund also benefits from transparency in quantifiable reporting on social impact of fixed income investments.”

The fund will be co-managed by London-based Zahn and Roderick MacPhee, vice president, portfolio manager and research analyst for FTIF. They will be supported by the wider FTIF team, which includes a dedicated ESG team of six investment analysts based in Europe. Franklin Templeton’s European fixed income group has managed ESG aligned strategies since 2017.

This is not the first time this year that Franklin Templeton has launched a product centred around principles. In June, the firm said it was launching its Catholic Principles Emerging Markets Sovereign Debt Ucits ETF within its Franklin LibertyShares range, which it called the first of its kind in the European market.

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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