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Franklin Templeton to soft close $16bn growth fund

Franklin Templeton to soft close $16bn growth fund

The Templeton Growth Fund, launched in 1954 by John Templeton, is being de-registered in Germany, the last country in Europe that had still sold the $15.9 billion fund.

Due to regulatory changes surrounding Alternative Investment Funds (AIF), the fund is no longer compatible for the European market and will see the fund closed to new investors in Germany as of July next year.

With the new changes, the fund will come under the bracket of an AIF and will not be able to claim Ucits status. Under these regulations, the fund manager must be based in the same country that the fund is domiciled.

In the case of the Templeton Growth fund, lead manager Norm Boersma (pictured) is based in the Bahamas while the fund is domiciled in the US.

According to Franklin Templeton, the company informed the German regulatory authorities, BaFin, of the discrepancy but could not come to a suitable agreement for both parties.

'After close examination of the final regulatory text and the ramifications of a possible restructuring of the fund, Franklin Templeton came to the conclusion that the fund's existing structure can not be in accordance with the new regulatory demands,' according to a statement issued by the company.

Boersma has managed the fund since 2011 when he took over from Cindy Sweeting. The fund experienced a period of underperformance until then, losing 22.3% compared to its benchmark that lost 13.9% in the three years prior to Boersma taking over.

Since March 2011, when Boersma assumed control of the fund, it has returned 28.76% in US dollar terms. This compares to a rise of 24.3% by its benchmark, the MSCI World TR USD, over the same 30 month period.

In an interview with Citywire Global in 2012, Boersma revealed the changes he was making to the fund, including a reduction in health care stocks.

The fund has not been sold in Austria since the beginning of 2011. With the move to de-register the fund in Germany, the fund will lose its presence in the European market and will focus on its investor base in the US and Canada.

Alternative options

The Templeton Growth Fund was originally made available to German investors in 1982. Since this date Franklin Templeton has launched a number of Ucits-compliant funds for distribution in Germany.

This includes the Templeton Growth (Euro) Fund, which is managed by the same team as the Templeton Growth Fund. It follows the same investment strategy and has a large number of the same stocks.

The Luxembourg-domiciled Templeton Growth (Euro) Fund remains open to German and European investors and currently has €5.78 billion in assets under management.

Reinhard Berben, managing director of Franklin Templeton in Germany, said: ‘With the launch of the SICAV version of the fund 13 years ago, German investors can still invest in a fund with the same time tested strategy and portfolio management team.’

 

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