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Toronto-based Franklin Templeton Investments Corp. has launched an alternative mutual fund, the investment manager announced Monday.

The Franklin K2 Alternatives Fund uses a multi-strategy approach as it seeks to limit volatility and offer downside protection, while providing added diversification and low correlation to the market, the firm said in a news release.

The firm said the fund seeks to replicate the returns of high-conviction hedge funds and “monetize behavioural and structural market anomalies using a systematic approach.”

The fund is sub-advised by Franklin Templeton’s K2 Advisors. If market conditions warrant, the sub-advisor may implement a conditional risk overlay for risk mitigation to hedge against negative market events, the firm said.

Franklin K2 Alternatives Fund will be co-managed by Brooks Ritchey, senior managing director and head of portfolio construction; Rob Christian, senior managing director and head of investment research; and Gordon Nicholson, senior vice-president and portfolio manager, K2 Advisors.