SOURCE: Franklin Templeton

Franklin Templeton

August 03, 2016 09:45 ET

Franklin Templeton and K2 Advisors Launch Liquid Alternative Global Macro Fund

Fund Seeks to Provide Diversification Benefits During Periods of Market Stress

SAN MATEO, CA--(Marketwired - Aug 3, 2016) - Franklin Templeton Investments today announced the launch of Franklin K2 Global Macro Opportunities Fund (NASDAQ: FKMZX) (Advisor Class) for US investors, a multi-manager fund that invests in a variety of global macro strategies sub-advised by institutional-quality hedge strategy managers. Global macro hedge strategies generally have the widest mandate of all hedge strategies, as managers may take positions across the asset classes of global equities, interest rates, currencies or commodities.

"Against the backdrop of increased global macroeconomic and political uncertainty, many US investors are potentially taking on more equity risk than their goals would dictate, and may be open to looking for new ways to diversify their investment portfolios," said Rob Christian, a portfolio manager and senior managing director for K2 Advisors, part of Franklin Templeton Solutions. "Global macro strategies can serve as a tool that may help provide diversification benefits in relation to equity markets, especially during periods of market stress."

The Fund invests across global macro hedge strategies with highly flexible mandates that go beyond long-only approaches, targeting opportunities presented by emerging trends and themes in global markets. With this Fund, investors can access a select group of hedge strategy manager sub-advisors in a single diversified portfolio.

Building upon Franklin Templeton's strategic acquisition of alternative solutions provider K2 Advisors in 2012, this new US-registered fund further fills out the firm's liquid alternative fund offerings, which also include the Franklin K2 Long Short Credit Fund (NASDAQ: FKLZX) (Advisor Class) launched in September 2015, and the Franklin K2 Alternative Strategies Fund (NASDAQ: FABZX) (Advisor Class) introduced in 2013.

"With the introduction of the Franklin K2 Global Macro Opportunities Fund, we can now offer retail investors access to additional potential sources of total return," said Brooks Ritchey, a portfolio manager and senior managing director for K2 Advisors. "For investors looking to complement their overall portfolios with a solution that historically has offered lower correlation to equity markets and a diversified, multi-manager approach, we believe this Fund can be an important tool. We are very excited about the potential utility of this Fund in helping equity investors seek to manage investment portfolios through volatile market periods."

Franklin K2 Global Macro Opportunities Fund's goal is to seek to provide capital appreciation over a full market cycle, by allocating the Fund's assets across global macro-focused investment strategies, which are generally concentrated on discovering macroeconomic investment opportunities across numerous markets and investments. The Fund's allocations to these strategies and sub-advisors will reflect the Fund portfolio management team's top-down market views.

The Fund will allocate its assets to a variety of hedge strategy managers selected by K2 Advisors through a rigorous, proprietary due diligence process. The strategies employed by the initial hedge strategy managers may include discretionary and systematic macro strategies.1 The sub-advisors may invest in a wide range of global exchange traded and over the counter derivative instruments that provide the Fund with broad exposure -- either long or short -- to various asset classes, including equities, fixed income, interest rates, commodities and currencies. The Fund may also hold a wide variety of securities, including equities and various credit instruments, such as sovereign, quasi-sovereign and corporate bonds. K2 Advisors has been allocating to global macro strategies since 2006 and currently manages approximately $1.6 billion in investments in Global Macro strategies.

In addition to Ritchey and Christian, the Fund's portfolio management team also includes portfolio manager Anthony Zanolla, a senior vice president at K2 Advisors.

The Fund's initial set of sub-advisors2 includes:

  • Aspect Capital Limited (Systematic)
  • Emso Asset Management Limited (Discretionary)
  • Graham Capital Management (Systematic)

Important Information about the Fund
All investments involve risks, including possible loss of principal. The Fund is actively managed and could experience losses if the investment manager's or sub-advisors' judgment about particular investments made for the Fund prove to be incorrect. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses (as well as gains) that significantly exceed the Fund's initial investment. The market values of securities owned by the Fund will go up or down, sometimes rapidly or unpredictably. Liquidity risk may exist when securities have become more difficult to sell, or are unable to be sold, at the price at which they have been valued. The sub-advisors may not be successful in maintaining effective and operational trading models used to implement systematic strategies. An issuer of debt securities may fail to make interest payments or repay principal when due. Lower-rated or high yield debt securities involve greater credit risk, including the possibility of default or bankruptcy. When interest rates rise, debt security prices tend to fall. Foreign investments are subject to greater investment risk such as political, economic, credit, information and currency fluctuation risks. Investments in emerging markets are subject to the risks of foreign investing and have additional heightened risks. Commodity and commodity-linked investments present heightened risks, are speculative and can be extremely volatile. Please see the prospectus and summary prospectus for information on these as well as other risk considerations.

Important data provider notices and terms available at www.franklintempletondatasources.com.

Investors should carefully consider a fund's investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN /(800)342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.

About K2 Advisors
K2 Advisors, part of Franklin Templeton Solutions, provides integrated hedge fund and alternative product solutions covering multiple strategies to institutional and high net worth investors as well as liquid alternative fund offerings for retail investors worldwide, with over $10 billion in assets under management as of June 30, 2016. Products and services offered include single investor custom-tailored investment programs, commingled funds of hedge funds, and strategic advisory relationships. The Stamford, CT-based firm has a global presence with 116 employees and offices in New York, London, Tokyo, Hong Kong and Sydney. For more information, please visit www.k2advisors.com.

About Franklin Templeton Investments
The funds' principal underwriter is Franklin Templeton Distributors, Inc., a wholly-owned subsidiary of Franklin Resources, Inc. (NYSE: BEN), a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 180 countries. Through specialized teams, the company has expertise across all asset classes -- including equity, fixed income, alternative and custom solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California-based company has more than 65 years of investment experience and over $732 billion in assets under management as of June 30, 2016. For more information, please visit franklintempleton.com.

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1. The principal investment strategies to be used by the sub-advisors include:

  • Discretionary:  Discretionary macro strategies seek to profit by capturing market movements throughout a broad universe of investment opportunities utilizing a combination of fundamental market research and information in conjunction with quantitative modeling to identify opportunities that exist within the markets. While the markets they invest in may be diverse, sub-advisors in these strategies may hold more concentrated positions in a limited number of markets at any one time. Such sub-advisors may invest across a variety of different markets, including emerging markets and/or developed markets. They also may express their views through a variety of different asset classes and instruments, including equities, fixed income securities, commodities, futures, options, swaps, and foreign exchange contracts.
  • Systematic: Systematic macro strategies customarily utilize computer-based models to identify opportunities across various different markets and asset classes. These models typically produce trading signals on an automated basis, which establish positions across equities, fixed income, commodities, and currencies. A broad array of strategies can be implemented within systematic strategies including, but not limited to, trend-based models, market momentum models, mean reversion models, and fundamental models. These strategies typically employ computer-based proprietary trading and risk management.

2. These sub-advisors are those that are managing the assets of Franklin K2 Global Macro Opportunities Fund as of August 3, 2016. K2 may add or subtract sub-advisors in the future, subject to the approval of the Fund's Board of Trustees.

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Contact Information

  • Franklin Templeton Investments
    Corporate Communications:
    Craig Allen
    (212) 632-4238
    Stacey Coleman
    (650) 525-7458
    franklintempleton.com