The new offering aims for total income return and capital growth by investing primarily in a social bond portfolio, consisting largely of euro-denominated investment grade bonds from around the world.
It will support positive social outcomes to the extent that proceeds will be used exclusively to fund eligible social projects that directly alleviate a social problem for a target population.
This can include people living below the poverty line, people with disabilities, displaced people, among others, and targets a wide range of social projects like affordable housing, job creation, food security, social progress -economic and access to essential services.
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Investments will primarily be involved in socially sustainable activities, including those related to the United Nations Sustainable Development Goals (SDGs), including ‘Np Poverty’, ‘Zero Hunger’, ‘Clean Water’ and ‘Sanitation’, ‘Decent Work’ and ‘Economic Growth’.
It will be led by David Zahn, senior vice president and head of European fixed income for Franklin Templeton fixed income both global sovereign and EMD and Roderick MacPhee, vice president, manager and research analyst for Franklin Templeton fixed income securities.
They said the biggest source of alpha would come from active stock selection, duration management and sector allocation.
Zahn added that the pair were “thrilled” with the new fund and coupled with the fact that Europe was “the largest and most advanced social bond market in the world and continues to experience rapid growth”, he said. that this strategy will give investors access to a wide range of attractive social bonds and the ability to support investments aimed at creating societal benefits.
The managers will be supported by the extended fixed income investment team, including a dedicated ESG team made up of six investment analysts based in Europe.
Franklin European Social Leaders Bond is a sub-fund of the group’s Franklin Templeton range of investment funds domiciled in Luxembourg and will be registered in nearly 20 European countries, including the United Kingdom.
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“Given recent events and the growing focus on the environmental aspects of sustainable investing, investors are increasingly interested in considering the S in ESG,” Zahn said.
“The launch of this new fund is now a timely opportunity to bring a distinct strategy to the market and expand our product offerings that address the welfare of society. In addition, an actively managed social bond portfolio can provide an attractive source of risk-adjusted returns while providing liquidity to new and existing projects contributing to positive social outcomes.
“This fund also benefits from transparency in quantifiable reporting on the social impact of fixed income investments.”
Jaspal Sagger, head of global product strategy at Franklin Templeton, said the team recognizes the range of client motivations around sustainable investing and that Franklin Templeton “will continue to develop solutions to meet these different needs.
“The launch of this new social bond fund offers a solution for investors seeking positive social outcomes with real impact on people’s lives.”