Templeton Global Growth Fund announces new Investment Management Agreement with Franklin Templeton Investments Australia

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Templeton Global Growth Fund Ltd (ASX: TGG), a 32-year old Australian listed investment company (LIC) has entered into a new Investment Management Agreement with incumbent manager Franklin Templeton Investments Australia Limited (FTIAL) which includes a significant reduction in the management fee.

Effective 1 November 2019, the Investment Management Agreement is for three years on the same terms as the previous agreement but with a lower annual management fee of 0.75% that will be charged on the Company’s market capitalisation. This is a significant reduction in the previous management fee of 1.0% of net tangible assets (NTA).

Commenting on the new fee structure, TGG Non-Executive Chairman, Mr Chris Freeman, said: “This makes TGG one of the lowest, if not the lowest, cost global equity LICs in Australia. By aligning the management fee with market capitalisation, rather than the net asset value of the portfolio, the Board believes shareholder interests will be better served. We believe this is a forward-thinking approach, and one which has been the preferred approach in other larger and successful LIC markets, such as the UK.”

To further align the investment manager with shareholder interests, FTIAL will now be paid a capped performance fee of 20% of outperformance against the MSCI World All Countries (net dividends) Index after allowing for investment management fees. This performance fee will be based on a three-year rolling period but will not commence until year three of the Investment Management Agreement. The total fees will also be capped at a maximum of 2% of net asset value.

The changes come off the back of the TGG Board engaging an independent asset consultant to analyse TGG against other peer LICs in terms of investment philosophy, performance and fees.

Based on the review and feedback from shareholders, the TGG Board considered that most shareholders have invested to access the Templeton Global Equity (TGEG) group’s long-term value-based investment philosophy and remaining with that philosophy and investment approach would continue to best serve shareholders’ interests.

Further to this, recently appointed Executive Vice President of TGEG, Peter Sartori, will be assuming lead portfolio management responsibilities for TGG from 2 December 2019, supported by TGEG team members, Alan Chua, Portfolio Manager, and Paul De Josselin, Research Head for Asia. Mr Sartori and Mr Chua each have 29 years’ global industry experience and Mr De Josselin has more than 22 years’ industry experience.

Mr Freeman said, “While TGG remains true to Templeton’s original investment principles and fundamental value-oriented investment philosophy, these changes allow TGG to take advantage of new investment management talent, broaden its research coverage, and enhance its technology and portfolio risk modelling.”

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