The time is coming when the European equity market will no longer be thought of as a contrarian play, according to Michael Clements, vice president and portfolio manager, Franklin Equity Group®. This may come as a surprise to some investors who still think of Europe and its industries as very much mired in crisis. However, the reality is that Europe is home to many businesses that have prospered despite a recession—many doing so thanks to their exposure to high-growth developing markets. What is more, says Clements, these companies are competitively priced in global terms and well positioned to capture any upswing in the markets next year. Read on for his perspective on Europe—and European equities—for the year ahead.
Going against the grain is never easy, particularly when it comes to investing. But if you don’t take the risk of moving out of the crowd and taking a different path, you can’t really stand out. Since its inception, Templeton Global Equity Group has focused on bottom-up value investing, which often puts it at odds with the broader market consensus. Cindy Sweeting, director of portfolio management, Templeton Global Equity Group, goes back in history to describe how the strategy has persevered through different market cycles, and why the Templeton team has been going against the grain by investing in Europe at a time when other investors had lost faith.
A few months ago there was a lot of buzz about a so-called “Great Rotation,” used to describe an investor exodus from fixed income and into equities, conjuring up images of a massive herd of wildebeest on the African plain racing for greener pastures. Oftentimes, when investors react to the market with a herd mentality, they can wind up losing sight of where they are going, and why. Eric Takaha, senior vice president and portfolio manager, says what he’s seen is more of a “selective rotation.” He notes that some areas of fixed-income have done well this year and could continue to provide compelling opportunities for investors willing to do some independent thinking. Read more…
Expectations for many emerging markets have changed significantly over the past two years. India represents a country in transition in many ways, and has also seen dramatic swings in sentiment. Many economic commentators initially praised India as a global economic power, then dismissed it as almost a basket case. Sukumar Rajah, managing director and chief investment officer, Local Asset Management, Asian Equity, presents a more balanced view and sets out the investment case for Indian equities.
During tumultuous market spells, it would be nice to believe that risk-free investments exist, and that government debt is a risk-free harbour. After all, governments don’t really go bust, do they? But John Beck, senior vice president and co-director of our International Bond Group, Franklin Templeton Fixed Income Group®, argues there are no safe havens. Read on for his explanation for why he takes facts over comfortable fictions.
In recent months, statements from the US Federal Reserve (Fed) alluding to a “tapering” of its longstanding quantitative easing program had thrown global fixed income investors into a tailspin. While the timing of such tapering remains unclear, Richard Hsu, Vice President and Portfolio Manager, Franklin Templeton Fixed Income Group®, floats an investment idea for those worried about the eventual normalization of interest rates from their currently low levels: floating-rate debt.
The floating rate debt market consists of below-investment-grade credit quality loans that are arranged by banks and other financial institutions to help companies finance acquisitions, recapitalizations or other highly leveraged transactions. These are also called leveraged loans or bank loans. Although leveraged loans are considered below-investment-grade in credit quality, typically their “senior” and “secured” status can provide investors/lenders a degree of potential credit risk protection. So what is it about these leveraged loans that Hsu finds appealing? Read on.
Investors around the world are breathing a sigh of relief that US Congressional lawmakers managed to come together for an 11th hour deal to avert a potentially crippling debt default. The debt ceiling was raised, even if temporarily, and the US government will reopen after being shuttered for more than two weeks. However, US politicians still haven’t found a permanent solution to the nation’s debt problems, possibly setting up another round of fiscal battles in the future. While Mutual Series® Executive Vice President Philippe Brugere-Trelat is relieved the US has avoided a sovereign default, he wonders whether global investors might be starting to lose a little faith in the US. Read more…
Europe has suffered greatly since the onset of the global financial crisis, making it one of the more challenging investment environments for fixed income; so much so, in fact, that investors have for some time preferred to look elsewhere.
But taking such a view could be a mistake, says David Zahn, Senior Vice President and Head of Franklin Templeton’s European Fixed Income team.
For investors seeking improved returns on their fixed income portfolios, Zahn believes Europe presents a number of interesting investment opportunities.
The recent elections in Germany loomed large in many investors’ minds, as the future direction of the European Union’s continuing efforts to recover from a regional banking and sovereign debt crisis seemed to hinge on German Chancellor Angela Merkel’s chances of winning her re-election bid. In a nod to her handling of Europe’s financial crises, Merkel’s win on September 22 removed at least one layer of uncertainty. Uwe Zoellner, portfolio manager and head of Pan-European Equity at Franklin Equity Group, provides his post-election perspective. Read more…
In the past few months, the global markets seem to have been fixated on the US Federal Reserve’s words and actions (or lack thereof). Will the Fed wind down its longstanding quantitative easing (QE) program, and when? Will the money tap dry up, and, with it, global liquidity? In more recent days, US markets in particular have been focused on a looming government shutdown, adding a dose of uncertainty—and volatility.
Initial hints of such a winding down of the Fed’s prolonged QE program triggered a market jolt in June, and participants were pricing in a September start to so-called “tapering.” It was a surprise, then, when the Fed decided to push pause on any such plan at its September 18 policy meeting.
Dr. Michael Hasenstab, co-director of Franklin Templeton’s International Bond Department and portfolio manager, said the reasons for the Fed’s inaction were a mystery even to him. Read more…