The Hindu Business Line : Franklin Templeton proposes Asia-focused fund

Kolkata, July 13 Franklin Templeton has proposed to roll out international funds with a view to cater to investors who wish to look beyond products that invest in securities from just one country.

Franklin Templeton, which made a small beginning last year with the launch of Templeton India Equity Income Fund (which has limited exposure to global stocks), intends to make a beginning by offering a product aimed at investing mainly in major Asian markets.

The fund house is of the view that international products may well be among the top attractions for Indian investors in the days ahead. Serving as the backdrop for its premise is the growing interest displayed by local investors in emerging markets.

“Indian investors have in recent times wanted to participate in the growth offered by markets other that the one they have traditionally known,” said Mr Vivek Kudva, President, Franklin Templeton Asset Management (India) Pvt Ltd.

The regulator’s approval for the proposed Asia-focused fund is awaited, he added.

Allahabad bank tie-up

On Thursday, the fund house tied up with Allahabad Bank for distributing its products. It has in the past entered into similar arrangements with other banks. The latter, Mr Kudva felt, are in a position to reach out to new sets of customers, thanks to the kind of branch networks that have been developed.

Templeton India Equity Income Fund, it may be mentioned here, has a diversified portfolio of stocks. Some of the international stocks that have been included in the portfolio are Hana Financial Group (Korea), Emaar Properties (UAE), Giant Manufacturing Co (Taiwan), and Lukoil-Holdings (Russia).

In addition, select stocks have been chosen from the Turkish and Polish markets. It has exited from Daelim Industrial (South Korea) and Dongfang Electrical Machinery (Hong Kong).

The fund had maintained a higher cash exposure during initial months as Franklin Templeton was waiting for new guidelines for overseas investments. In March 2007, its allocation to overseas stocks stood at 26.7 per cent of the assets, accounted for by 17 companies.

US g-sec feeder fund

Not many investors will find merit in Franklin India International Fund at this stage, Mr Kudva said while referring to the fund’s uniqueness — investment in units of Franklin US Government Fund.

The latter allocates mainly to securities issued or backed by the US Government. He, however, added that the scenario may at some point change for the better, subject to modifications in market conditions, leading to a change in investors’ preferences.

The US fund, launched in 1991, invests in securities popularly called ‘Ginnie Maes’. The feeder fund in India is the only one of its kind in the country.

Lately, Principal MF has reworked one its local equity products, turning it into a feeder fund that invests in units of a fund that focuses on emerging markets.