Franklin Templeton closes bond fund over insufficient AUM
Franklin Templeton has announced it will close its Global Alpha Core Bond Fund, having changed two fixed income funds in its Brandywine range last week.
The managed investment scheme was set up in July 2017, but will now begin winding it up from 15 September due to its unsustainable size which currently stands at $12.4 million.
It is understood more assets go into the firm’s Australian Absolute Return Bond Fund instead, which has $1.1 billion in assets under management.
While the Global Core Alpha Bond Fund has struggled to gain assets, it has maintained successful outperformance as over the past year, the fund has returned 5.1 per cent versus returns of 4.3 per cent by the Bloomberg AusBond Composite Bond Index.
“Franklin Templeton Australia has considered the current assets under management and the anticipated likelihood of growing the fund’s AUM in the near term, and has determined that it is in the best interest of all unitholders to wind up the fund in an orderly manner and return the proceeds to investors.”
The wind-up process is expected to be completed in September 2025.
The change comes just days after it enacted changes to two other fixed income funds run by affiliate Brandywine Global.
The $145 million Brandywine Global Income Optimiser Fund will be known as the Global Dynamic Bond Fund from 9 October and have a new investment objective to focus on income and capital appreciation.
Meanwhile, the benchmark on the $141 million Global Opportunistic Fixed Income Fund will move from the FTSE World Government Bond Index (Hedged to AUD) to the Bloomberg Global Aggregate Index (Hedged to AUD).
Both funds will also see fee reductions as part of the firm’s commitment to delivering greater value and improved outcomes for investors.
On the Global Dynamic Bond, this will reduce from 0.65 per cent to 0.50 per cent for Class A, and 0.50 per cent to 0.45 per cent for Class M. On the Global Opportunistic Fixed Income Fund, Class A units will reduce from 0.7 per cent to 0.55 per cent.
In Morningstar’s Australian Asset Manager report for Q2 2025, it found fixed income – which includes private debt, diversified credit and unconstrained fixed income, as well as traditional bond strategies – and cash are the only products managed by traditional active managers reporting positive flows.
This was attributed to investors seeking defensive positions in light of concerns around US tariffs and trade policy which dented their risk appetite and pushed defensive asset allocations above historical averages.
AUTHOR
Laura Dew
Recommended for you
Investment solution provider Channel Capital has appointed James Archer as its latest distribution director, joining from Pinnacle Investment Management.
Bennelong Funds Management has signed a memorandum of understanding with US private credit manager Monroe Capital to distribute its products in Australia.
Global equity manager Talaria Capital has appointed a Sydney-based sales director as it grows its distribution presence across Australia.
Global private markets firm Partners Group has launched an evergreen fund to provide Australian advisers with access to its cross-sector royalties strategy.
