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FRANKLIN TEMPLETON INVESTMENTS
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Mohieddine KronfolChief Investment Officer
Global Sukuk and MENA Fixed IncomeFranklin Templeton Investments (ME)
FIDUCIARY TRUST INTERNATIONALFRANKLIN TEMPLETON INVESTMENTS
Swiss Arab Forum
Geneva, April 2013
FRANKLIN TEMPLETON INVESTMENTS
Questions to answer
1. What do the panelists think of headline investment themes?
2. To which asset class will money flow to?
3. Is there a “rotation into equity” trend?
4. What are your key asset allocation conclusions?
5. How do unconventional and alternative strategies fit into your model portfolio?
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FRANKLIN TEMPLETON INVESTMENTS
Headlines
Rising US Treasury rates Eurozone debt problems Slowdown in China
Political confrontations with Iran Frontier Market momentum Currency Wars
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December 2011 May 2012 March 2012 January 2013 March 2013
Sep 2008 January 2009 May 2009 January 2010 February 2011
FRANKLIN TEMPLETON INVESTMENTS
Global Financial Assets (USD 220 Trillion)22% of which is managed by asset managers
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Source: McKinsey Global Asset Management Database
FRANKLIN TEMPLETON INVESTMENTS
The Institutional Segment Represents 2/3rd of the Market With Defined Contribution plans generating almost all of the growth
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Source: McKinsey Global Asset Management Database
FRANKLIN TEMPLETON INVESTMENTS
The Retail Market (USD 19 Trillion) Has ShiftedPrincipally through money market, fixed income and emerging market allocations
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Source: McKinsey Global Asset Management Database
FRANKLIN TEMPLETON INVESTMENTS
Retail Equity Funds Database CoverageThe US still commands 52% of the retail market
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Monthly Report
Fund Group # of Funds $US Billions Market Share
Asia ex-Japan 2,495 381 3.7%
EMEA 776 55 0.5%
GEM 1,948 594 5.8%
Global 8,448 2,788 27.3%
Japan 858 112 1.1%
Latin America 447 59 0.6%
Pacific 427 81 0.8%
USA 10,169 5,312 52.0%
Western Europe 4,421 822 8.0%
TOTAL 29,989 10,208 100%
Source: EPFR Global Database, March 2013
FRANKLIN TEMPLETON INVESTMENTS
Retail Bond Funds Database CoverageEmerging markets represent only 3.6% of Bond Assets
Monthly Report
Fund Group # of Funds $US Billions Market Share
Balanced 1,856 1,087 11.5%
Emerging Markets 2,432 339 3.6%
Global 4,915 1,261 13.3%
High Yield 1,921 544 5.7%
Money Market 2,525 3,479 36.8%
USA 4,808 2,735 28.9%
TOTAL 18,457 9,448 100%
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Source: EPFR Global Database, March 2013
FRANKLIN TEMPLETON INVESTMENTS
2013 has had a very strong start
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“The aggregate inflow to start 2013 has been far and away the best start of any year this cycle (measured as the past five years). 2013 has now tallied over $40.8 billion in new investor subscriptions into foreign stock funds, over 6 times greater than the $6.6 billion over the same period last year. The next best year, 2010, had just half the investor interest of 2013 with just over $19.0 billion allocated to foreign stock funds during the first 10 weeks that year. Both 2008 and 2009 had foreign stock outflows during their first 10 weeks”
“In aggregate, the first 2 and a half months of 2013 have been the best start for domestic equity fund flows over the past 5 years with $21.2 billion of new stock funds having been purchased by investors (compared to the $7.1 billion of redemptions by investors in the category over the same time period last year, and the $13.6 billion that came into funds in 2011). The years of 2008, 2009, and 2010 all had outflows during the first 10 weeks”
FRANKLIN TEMPLETON INVESTMENTS
Asset Allocation
Benchmark JP Morgan Roubini HSBC
Equity 40 56 39 28
DM Equity 35 34 12
EM Equity 5 5 16
Fixed Income 50 40 51 59
Sovereign 40 17 44 23
Corporate 4 23 2 11
EM Fixed Income 4 + 3 9
Inflation Protected 2 + 2 16
Commodities 5 4 5 13
Cash 5 0 4 0
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JP Morgan, Global Markets Outlook and Strategy, March 6, 2013RGE Cross Asset Model Portfolio, December 2012HSBC Asset Allocator, March 14, 2013
FIDUCIARY TRUST INTERNATIONALFRANKLIN TEMPLETON INVESTMENTS
FRANKLIN TEMPLETON INVESTMENTS
Alternative Strategies
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FRANKLIN TEMPLETON INVESTMENTS
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Source: Central Bank Reports, Securities Commission Malaysia, DataMonitor, Eureka Hedge, Zawya, IFSL, Ernst & Young analysis
Islamic Financial Services: A $1 Trillion Market Growing at 30% Annually Since 2000
FRANKLIN TEMPLETON INVESTMENTS
Islamic Asset Management Landscape
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FRANKLIN TEMPLETON GLOBAL SUKUK FUND
Source: Eurekahedge, Zawya, Ernst & Young – The Islamic Funds & Investments Report 2011
*Note: Other includes alternative investments and feeder funds
FRANKLIN TEMPLETON INVESTMENTS
Your Questions Please …..
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