Franklin Templeton makes changes to high-income fund

The firm has also a currency management strategy and fee reduction for certain series of the mandate

Franklin Templeton makes changes to high-income fund

Franklin Templeton Investments Canada has added an active currency management strategy and reduced management fees for certain series of its Franklin High Income Fund.

“Many Canadians are looking for yield in their fixed income portfolios but also want to have flexible currency management to help navigate currency risks and opportunities," said Duane Green, president and CEO, Franklin Templeton Investments Canada.

"By having our Franklin Bissett Fixed Income team actively manage the currency hedging strategy for Franklin High Income Fund, the fund now provides Canadian investors currency exposure managed from a Canadian perspective," he added.

On January 1, the fund’s approach of applying a 100% passive currency hedge overlay will be replaced with a more active currency-management strategy, to be conducted by the Franklin Bissett Fixed Income team. The hedge will be reduced to a base ratio of 75% hedged and 25% unhedged distribution, which be adjusted by 25% in either direction based on the investment team’s outlook for the Canadian dollar relative to its US counterpart.

On the same date, management fees on Series P and Series O units of the Franklin High Income Fund will be reduced by five basis points as indicated below:

  • Series PF – from 0.70% to 0.65%
  • Series O
  • from 0.8% to 0.75% (for investors with $200,000 to $2.5 million in investable assets)
  • from 0.7% to 0.65% (for investors with $2.5 million to $5 million in investable assets)
  • from 0.65% to 0.6% (for investors with more than $5 million in investable assets)

The management of the fund will remain with Glenn Voyles, SVP, director of portfolio management, and portfolio manager with the Franklin Templeton Fixed Income Group. The active currency management strategy, meanwhile, will be run by Darcy Briggs, SVP and portfolio manager with Franklin Bissett.

The Franklin High Income Fund seeks high current income and potential capital appreciation primarily through investments in higher-yielding, lower-rated debt securities.