Franklin Templeton introduces target return fund that manages volatility

Franklin Templeton Investments Corp. has launched the Franklin Target Return Fund, which aims to meet clear return targets while keeping overall volatility within a specific range.

The portfolio team seeks to diversify risk by focusing on growth, defensive and stable investments.

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“With the Target Return Fund, we are moving away from thinking in pure asset class terms and more toward investing with risk factors in mind,” says fund manager Matthias Hoppe, senior vice-president and portfolio manager at Franklin Templeton Multi-Asset Solutions, in a release. “We want to diversify the fund across a wide range of risk factors and ensure that one factor doesn’t overly dominate the portfolio.”

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The fund aims to achieve a 4% return net of fees over the FTSE TMX Canada 91-day T-Bill index over a rolling three-year period, regardless of prevailing market conditions, and within a predefined volatility range of between 6% and 9% over the same three-year period. The portfolio managers plan to achieve this by actively managing direct and indirect exposure to equity and fixed income securities, cash and cash equivalents, and derivative instruments to access alternative investment strategies with low correlation to traditional equity and fixed-income instruments.

The fund is offered under National Instrument 81-104 Commodity Pools and will be registered-plan eligible.

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