Matthew Harrison

Franklin Templeton is pleased to announce the appointment of Matthew (Matt) Harrison and Tariq Ahmad as Co-Heads of APAC, effective August 1, 2022.

In their roles, Matt Harrison, currently Managing Director, Australia and Tariq Ahmad, currently Head of Asia Distribution, will have joint ownership and accountability of APAC strategy to best serve the firm’s clients and drive growth in the region.

They take over from Vivek Kudva, Head of APAC, who will be retiring from Franklin Templeton on July 28, 2022, after 16 years at the firm, pursuant to a plan put in place in 2019.

Matt and Tariq will report to Adam Spector, EVP – Global Advisory Services and will jointly develop and execute the overall APAC strategy.

Adam Spector, EVP – Global Advisory Services at Franklin Templeton said: “The Asia Pacific region is critical to the growth strategy for Franklin Templeton. Both Tariq and Matt are industry veterans with successful track records of leading investment management businesses. Their appointment will allow us to capture rapid growth opportunities in the backdrop of shifting market dynamics. Given the strengths of both leaders, we are confident that they will meaningfully accelerate the firm’s growth in the region.”

“Vivek Kudva has led our distribution efforts in both APAC and EMEA over his dedicated career at the firm. We would like to thank him for his important contribution over the years and wish him well in his retirement.”

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The Fund was also upgraded from ‘Bronze’ to ‘Silver’ by Morningstar in their latest review of the Fund.

The Morningstar Analyst Rating for Western Asset Global Bond Fund Class A is ‘Silver’ as of 25/02/2022

In their reports, both investment research houses highlight the strength and stability of Western Asset’s team, its consistency of process and proven track record over the long term.

Western Asset is a global active fixed income manager and part of the Franklin Templeton group.

In its report, Zenith notes: “Western Asset’s investment philosophy is premised on long-term fundamental value investing with a focus on capturing multiple return sources. It has consistently applied the same investment philosophy over multiple decades with proven success. The Fund has a range of excess return sources which can be opportunistically deployed, depending on the prevailing environment.”

According to Morningstar Global Fund Report published on 25 February 2022: “The process here is simple but effective. The team aims to identify mispricings within regions, sectors, and securities, allocating risk to areas in which it has conviction while ensuring diversification to damp volatility across market environments.”

The Fund provides investors with exposure to an actively managed portfolio of global fixed income securities. Around half the securities in the portfolio are government bonds and close to 20% are investment grade corporate bonds. More than half (57%) of the portfolio is in US securities. The Fund can hold up to 15% of its assets in sub-investment grade securities. The Fund is diversified, holding between 400 and 500 securities.

Western Asset believes in sourcing investment opportunities from a broad fixed interest opportunity set and has the ability to invest in securities that are not included in the Fund’s benchmark, the Bloomberg Global Aggregate Bond Index (hedged into Australian dollars).

The Fund’s objective is to outperform the Bloomberg Global Aggregate Bond Index (hedged to AUD) over rolling three to five-year periods.  As of 28 February 2022, the fund comprised AUD $486 million in funds under management.

Matthew Harrison, Managing Director, Franklin Templeton Australia says: “These new ratings showcase the ongoing strength of Western Asset’s investment team and its well-structured process. The foundation of Western Asset’s process is its Global Investment Strategy Committee, which provides centralised views on key decisions, such as duration, yield curve, country selection and currency positioning. In addition, specialist sector teams use their best ideas to populate targeted exposures with security selections.

“The investment team is led by Chief Investment Officer Ken Leech, who has been with Western Asset for 31 years, and responsible for building a long and successful track record,” Mr Harrison says.

Western Asset is among the largest global specialist fixed income managers, with operations in eight countries and employing 133 investment professionals. Global funds under management stands at A$685 billion. Western Asset is one of Franklin Templeton’s specialised investment managers.

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Hraiki has more than 20 years of experience in the financial services industry and joins Franklin Templeton from HUB24 where he was senior state manager for NSW and ACT. Prior to that, Hraiki was National Manager for Advice Relationships with IOOF.

Felicity Walsh, Head of Sales at Franklin Templeton Australia, said: “We are delighted to have someone of Marc’s calibre and experience join our growing team in Sydney. I am sure Marc will appreciate the Franklin Templeton culture which revolves around active engagement with our clients and being passionate about finding the right investment solutions to help achieve their goals.”

Matthew Harrison, Managing Director of Franklin Templeton Australia and New Zealand, says this appointment reflects the company’s strong growth and commitment to the market.

“We are well positioned to service our clients and assist them in creating sustainable businesses. We are excited about the future and the possibilities for deeper and expanded partnerships with our clients, led by our world-class specialist investment managers and capabilities.

“Marc has strong experience across the financial services sector and is accomplished at building and leading teams and developing business across the full gamut of channels. We are confident in his ability to drive our business forward throughout 2022 and beyond,” noted Harrison.

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O’Grady, with over 15 years of experience of working in the investment management sector, joins from Grant Samuel Funds Management, where he spent the past seven years as key account manager, responsible for growing funds under management across advisory groups, family offices and small institutional investors.

Prior to that, he was key account manager and regional account manager at Australian Unity Investments.

Matthew Harrison, managing director of Franklin Templeton Australia and New Zealand, says: “We are very pleased to have a sales executive of Huw’s skill and experience join us as we grow our business in Australia.

“Our team is a competitive advantage. We work hard to cultivate an inclusive workplace that helps our employees thrive, which in turn benefits our clients, our partners and our company.”

Felicity Walsh, Head of Sales at Franklin Templeton, says this new appointment reflects the growth in the business following the acquisition of Legg Mason last year.

“Today, we are well positioned to service our clients to create long-term, sustainable businesses off the back of a strong and experienced sales and distribution team.

“We continue to invest in people to remain innovative and nimble to meet the demands from our clients, backed by our world-class specialist investment managers and capabilities.

“Our global scale and reach are important, but this becomes even more powerful when combined with a local team that has deep contacts, local market insights and expertise,” she added.

O’Grady, who joins Franklin Templeton today, says: “I have a passion for asset management and take pride in working with clients to help deliver better investment outcomes. I am looking forward to bringing new perspectives and positive energy to the Franklin Templeton team.”

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Matthew Harrison

Franklin Templeton Australia has been named, for the second year in a row, the winner of the International Equities category at the 2021 IMAP Managed Account Awards.

The Institute of Managed Account Professionals (IMAP) is the only industry organisation for advisers, managers, providers and other businesses actively involved in offering or supporting Managed Accounts.

This annual award recognises the strong performance of the Franklin Concentrated Global Equity Ex-Australia Model Portfolio, a Separately Managed Account (SMA), with a long-only high conviction portfolio of global companies.

The Franklin Concentrated Global Equity ex-Australia Portfolio employs a disciplined, bottom-up, investment philosophy that seeks to deliver alpha over a full market cycle.

Franklin Templeton Australia Managing Director, Matthew Harrison said: “We are very proud to receive this prestigious award, for the second year in a row, that recognises our Franklin Global Growth team’s strong research-driven process and track record of investment excellence.

“This team has consistently demonstrated a high level of commitment to their investment methodology, implementing a bottom-up approach—which focuses on high-quality, sustainable growth companies—across a variety of market environments since 2004.

“We believe that investing in global equities offers investors the opportunity to access a broader investment universe, as well as enhanced diversification. This investment approach, which focuses on high-quality sustainable growth companies and a framework for diversification in the portfolio construction process, has enabled us to deliver strong risk-adjusted returns for our clients over the longer term.

“Putting clients first is our core value of Franklin Templeton and our award-winning managed accounts are part of a growing number of investment solutions we offer advisers. We look forward to continuing to provide access to our leading investment management solutions through the growing managed accounts sector,” said Mr Harrison.

Australian based portfolio manager Francyne Mu added: “Our rigorous investment approach results in a concentrated, best ideas portfolio of approximately 20 stocks. We look across all industries and countries for companies with sustainable business models that meet our growth, quality, and valuation criteria.

“We take a long-term perspective, researching stocks that we believe we can hold for three- to five-year periods as a company executes its growth model.

“The portfolio includes businesses that have solid growth prospects, strong management teams, and a sustainable competitive advantage, ranging from well-known to less discovered companies, adhering to the investment team’s strict quality and valuation metrics. Our preference for focused business models, in conjunction with a long-term investment horizon, allows for a differentiated approach, leading to good diversification across the portfolio,” she added.

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Reece Birtles

In a major update on their research-based approach to retirement income portfolio construction, leading active equity investment manager Martin Currie Australia reaffirms that retirees need to rethink the use of typical defensive portfolios based on risk/return theory and adopt a ‘sufficient income for life’ approach.

Martin Currie highlights in their newly released research paper^[1] that the sufficient income for life approach relies on the concept of income volatility as a measure of the risk of impaired living standards in retirement, rather than asset return volatility.

Martin Currie finds that, in practice, sufficient income for life leads to retirement income portfolios with higher equity allocations.

Importantly, the equity selection for a retiree portfolio will be different from those of an accumulation investor, with the sustainability of income, future income growth and diversification of income sources the critical considerations.

Reece Birtles, Chief Investment Officer, Martin Currie Australia, says: “Retirees require a reliable income stream to replace the wages they received when they were working, so it is more important to focus on the actual dollar income generated over time, rather than the headline yield percentage.”

“The old view of the economic behaviour of retirees that most existing multi-asset retirement products assume is that when people get to 65 they automatically become more risk averse and should move away from risky, growth-style assets and move towards defensive assets. We do not agree,” Birtles says.

“So-called low risk defensive assets have turned out to be low growth with high income volatility over the past decade.”

Sufficient income for life focuses on achieving a high and stable franked income stream to support annual expenses; income growth for inflation protection; and capital growth to manage longevity risk.

Martin Currie’s view is that not all growth assets should be considered ‘high risk’ and all defensive assets ‘low risk’. The attractiveness of different asset classes is significantly different when viewed through the lens of income volatility.

Over the past 10 years, Martin Currie has implemented this approach in its Martin Currie Equity Income, Real Income and Diversified Income Strategies. The performance of those funds presents strong evidence that the sufficient income for life approach may deliver the best probability of beating an income return target, compared with some income alternatives.

Features of these funds include:

• Stocks are selected on a forward looking ‘sustainable dividend’ basis, based on free cash flow generation through different stages of the economic cycle;
• A focus on high quality companies, which generate high free cash flow;
• A benchmark unaware construction. When looking through a sufficient income for life lens, it is more important to minimise concentration risk that chase benchmark-relative alpha. This helps ensure a more stable income stream;
• Maximise franking credits. For Australian retirees, franking credits are the closest thing they will get to a free lunch; and
• Australia focus. Portfolio construction methodology includes inflation drivers designed specifically for Australian retirees. The cost of living is largely domestically driven, therefore the risk to the investor is Australian in nature.

Birtles says: “We have compared results across several metrics, versus traditional lower-risk income alternatives such as term deposits, bonds and defensive balanced funds, as well as other categories such as balanced funds, broader equities and a rules based high-yield index approach.

“While the risk profiles vary, our research finds that the Martin Currie Australia retirement income strategies deliver the best probability of beating an income return target, compared with the income alternatives.”

Matthew Harrison, Managing Director of Franklin Templeton Australia & New Zealand, notes that investors and financial advisers face a complex challenge in constructing portfolios for a financially secure retirement.

“Many Australians will spend a third of their life in retirement and it’s critical they can generate the income needed to live well and keep up with rising costs without running out of money,” says Mr Harrison.

“Martin Currie’s innovative approach to retirement income provides a practical, research-based solution to this challenge and we are pleased to make their expertise and income strategies available to Australian investors and advisers.”

———-

[1] Investing in a sufficient retirement income in a post COVID-19 world

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Matthew Harrison

Franklin Templeton, one of the world’s largest investment managers, today announced that the Franklin Australian Absolute Return Bond Fund has passed a significant milestone, attracting $1 billion of funds under management from Australian investors.

Launched in December 2014, the Fund’s combination of attractive returns and strong risk management proved appealing to investors during the Covid-19 pandemic. Funds under management hit $500 million in July 2020 and then doubled in a period of ten months since then

Franklin Templeton Managing Director of Australia Fixed Income, Chris Siniakov, says the historically low rates in Australia and many parts of the world will continue to impact savers as economies recover from the Covid-19 pandemic.

“The current interest rate environment is here for some time and is creating challenges for investors seeking defensive returns without taking inappropriate risk,” notes Siniakov.

“The Fund fits in this niche, aiming to combine multiple lowly correlated alpha sources to deliver returns above the cash rate without overly relying on credit and yield based strategies.

The Fund is an actively managed portfolio of fixed income securities, designed to deliver defensive, stable returns through the interest rate and credit cycles while protecting against volatility through strong risk management. It is benchmarked against the Bloomberg AusBond Bank Bill Index.

Over the five-year period to April, the Fund has produced an average annual return of 3.44% (net of fees), versus a benchmark return of 1.36% per year over the same period. Absolute returns have been relatively consistent with positive performance nearly 90% of the time on a quarterly rolling basis.

Close to half the Fund’s investments are in investment-grade corporate bonds and close to 40% are in government securities. Currently, the Fund has no exposure to high-yield or riskier credit.

Matthew Harrison, Managing Director of Franklin Templeton Australia and New Zealand, says: “We are pleased with the momentum seen in this strategy and growth of the broader business in Australia. At Franklin Templeton, our whole focus is on delivering better outcomes for our clients and we are grateful for their ongoing support through a turbulent market environment.

“With cash yielding extremely low rates of return and increasing concerns about inflation, we’re hearing from many investors concerned about the erosion of their wealth in inflation-adjusted terms. They are looking for ways to generate real returns and consistent income streams, but some are concerned about the level of risk in the broad fixed income and equity markets,” notes Harrison.

“A defensive, absolute return approach to fixed income is proving attractive in this environment,” says Harrison.

The Fund has received ‘Recommended’ Ratings from both Zenith and Lonsec research houses and is available on most investment platforms.

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The new Franklin Templeton Australia distribution leadership team includes:

• Felicity Walsh expands her role as Head of Sales, to lead both the institutional and retail sales teams
• Amy Teh continues in her role as Head of Investment & Consultants
• Louise Farmakis continues in her role as Head of Client Service
• John Besley, formerly Head of Product and Client Operations at Legg Mason, takes up the new role of Head of Product
• Felicity Nicholson, formerly Legg Mason, continues in her role as Head of Marketing
• Serg Premier continues in his role as Managing Director ifsinvest

These announcements follow Franklin Templeton’s recent acquisition of Legg Mason which was completed on 31 July 2020. The acquisition established Franklin Templeton as one of the world’s largest, independent, specialised global investment managers, with US$1.4 trillion in assets under management (AUM) across one of the broadest ranges of high-quality investment teams in the industry.

Matthew Harrison, Managing Director, Franklin Templeton Australia and New Zealand said the new structure was an important part of the combined entity’s next phase of growth.

“I am excited by the opportunities ahead, and firmly believe we have a strong foundation from which we can drive further success for our valued clients. We remain focused on delivering better client outcomes by providing a truly diverse suite of high calibre active investment capabilities, global connections and local insights with a focus on innovation.”

Mr Harrison said challenges posed by the external environment, combined with the relentless pace of industry change, meant it was crucial to adapt and transform.

“We must respond quickly and innovatively to the changing demands of our clients and of the industry. With this new team in place we are well positioned to meet these demands, backed by an unmatched collection of world-class specialised investment managers, with expertise across asset classes, investment vehicles and geographies.”

Australia – a priority market

Franklin Templeton has signaled Australia as one of its three focus markets, alongside the UK and Japan.

“Australia has always been an essential market for Franklin Templeton – not just due to its size, but as a market that is mature and transparent, it provides fertile ground for learning and improvement, with lessons that can be shared globally, particularly around our world-class retirement system. Global scale and reach are important, but this becomes even more powerful when combined with local market insights and expertise,” Mr Harrison said.

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In his new role, Kudva will be responsible for leading the firm’s retail and institutional distribution across the region and continue to be based in Mumbai. Kudva’s appointment is effective at the completion of Franklin Templeton’s acquisition of Legg Mason, which is expected on 31 July 2020.

Kudva brings over three decades of industry experience and expertise in asset management and banking. Prior to taking up this role, he held a similar leadership position as Head of EMEA and India, also based in Mumbai.

Jenny Johnson, President and CEO of Franklin Templeton,said, “The acquisition of Legg Mason will establish Franklin Templeton as one of the world’s largest independent asset managers, with a newly combined AUM that will be over USD$164 billion in the APAC region, after deal close. I would like to congratulate Vivek Kudva on his new role to lead the team in delivering a range of truly diversified global investment strategies through an expansive distribution organisation with global reach and scale. Vivek’s strengths as a leader and depth of experience in various international markets position him ideally to lead our newly combined business in the APAC region.”

In addition, Kudva announced the following senior leadership team with expanded responsibilities in the combined organisation within the APAC region. All new appointments will be effective at the close of the acquisition:

• Matthew Harrison will continue in his role as Managing Director, Australia and New Zealand.
• Linda Liang will take up a new role as Head of China Strategy, overseeing the business of our wholly foreign owned enterprise (WFOE) in China as well as our joint venture company, Franklin Templeton Sealand Fund Management Co. Ltd.
• Isabella Chan will be appointed as Head of Hong Kong, with additional responsibility for the Taiwan business. Shannon Wang will continue as General Manager of Legg Mason Investments (Taiwan) Limited and report to Chan.
• For India, Sanjay Sapre will continue in his role as the President of Franklin Templeton Asset Management (India) Private Limited.
• In Japan, Suguru Kuwahata, currently President of Legg Mason Asset Management (Japan) Co. Ltd., and Tatsuya Oguchi, currently President of Franklin Templeton Investments Japan Ltd., will both report to Kudva and continue to develop the Japan business.
• For Korea, Yong-bae Jeon will continue in his role as President.
• Avinash Satwalekar will take up an expanded role as Country Head of Malaysia with additional responsibility for the oversight of Asia Marketing (ex-Japan and India). He will also continue to serve as Chairman of the Board for Vietcombank Fund Management (VCBF), a joint venture in Vietnam with Vietcombank.
• Dora Seow will take up an expanded role as Country Head of Singapore and the broader South East Asia region (ex-Malaysia and Vietnam) with additional responsibility for Asia Institutional Client Services.
• Richard Surrency, Head of Alternatives Sales, Asia, will continue in his role, focusing on growing the firm’s alternative business in the region.

Kudva commented, “I am delighted to be taking up my new role as Head of APAC for Franklin Templeton. Post the Legg Mason deal close, the combined entity will be well positioned to capitalise on the diverse growth opportunities that exist across the region. Our clients will benefit from the added capabilities across multiple world-class specialist investment organisations, and I look forward to working with my experienced leadership team to continue to deliver the exemplary service our clients expect from us.”

“The combination of our two distribution platforms will enhance organic growth in the region as we expand our presence in key markets such as Japan and Australia. In addition, we see tremendous growth potential in China as the country continues to further liberalise and open up its market,” added Kudva.

Following long and distinguished careers at Franklin Templeton, Mark Browning, Managing Director for Asia Pacific, and David Chang, Regional Head for Greater China, will both depart the firm. Andy Sowerby, currently CEO of Australia & New Zealand and Head of Asia Pacific (ex-Japan) for Legg Mason, has decided to leave the organisation. Browning, Chang and Sowerby will be staying on for a transitional period after the acquisition.

“We would like to thank Mark Browning, David Chang and Andy Sowerby for their dedicated service and invaluable contribution in building a strong franchise for Franklin Templeton and Legg Mason in the region,” said Johnson. “Moving forward, I am confident that our combined regional footprint led by Vivek will create a distribution powerhouse in the region, while significantly deepening our presence in key focus countries.”

The landmark acquisition of Legg Mason will establish Franklin Templeton as one of the world’s largest independent asset managers and will add differentiated capabilities to Franklin Templeton’s existing investment strategies, with modest overlap across multiple world-class specialist investment managers and distribution channels. The combined firm, with USD$1.4 trillion in assets under management, will bring added leadership and strength in core fixed income, active equities and alternatives—as well as an expansion of multi-asset solutions capabilities, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.

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Matt Heine

Industry-leading investment and superannuation platform provider Netwealth (ASX: NWL) has added the Franklin Concentrated Global Equity Ex-Australia portfolio, a Separately Managed Account (SMA), to its Managed Account Service.

Under the arrangement, Franklin Templeton will select a concentrated portfolio of typically around 20 international stocks, and investors can own the underlying stocks in the strategy by investing via the managed account. The Franklin Templeton global equities managed account portfolio is a long-only, high conviction portfolio with the ability to invest in companies across the market capitalisation spectrum and employs fundamental bottom-up stock analysis to identify and select quality growth companies.

Matthew Harrison, Managing Director, Franklin Templeton Investments Australia, said, “Australian investors have a growing desire to invest internationally, and demand for high performing, global and mid-cap equity strategies continues to grow. We are excited to have the Franklin Global Equity managed account portfolio added to Netwealth, offering investors the opportunity to tap into some of the world’s most forward-thinking companies.”

“The portfolio includes businesses that have solid growth prospects, strong management teams, and a sustainable competitive advantage. It includes well-known companies such as VISA and Salesforce, but also mid-sized companies believed to offer not only solid growth prospects and well-established competitive advantages, but also meet the investment team’s strict quality and valuation metrics.”

Netwealth Managing Director Matt Heine said: The strategy allows Australian investors to invest in global companies selected by experienced international fund manager Franklin Templeton, with the ability to directly own and include these companies in their portfolio. Franklin Templeton has a strong track record of managing international investments, and we are excited to collaborate in providing a new and compelling offering to Australian investors.”

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