August 3, 2016 / 1:51 PM / 3 years ago

Franklin Templeton launches global macro fund for retail investors

BOSTON (Reuters) - Mutual fund group Franklin Resources Inc said on Wednesday it will begin offering retail clients access to hedge funds that invest in currencies, interest rates, commodities and other securities in a new so-called liquid alternatives fund.

Its Franklin Templeton unit launched the Franklin K2 Global Macro Opportunities Fund this week and tapped hedge funds Aspect Capital Ltd, Emso Asset Management Ltd and Graham Capital Management to invest its assets, which currently stand at $25 million.

Unlike traditional hedge funds, which can require a minimum investment of $1 million or more, liquid alternative funds are cheaper, more liquid and more transparent, and appeal to smaller, or retail, investors. Franklin’s new global macro fund requires a minimum investment of $1,000.

“We have seen increased levels of geopolitical and economic instability in the world and these type of strategies tend to do better when volatility is rising,” said Rob Christian, one of the fund’s portfolio managers.

The new fund will be the third so-called liquid alternatives fund run by Franklin’s K2 Advisors unit, which invests roughly $10 billion in assets. Many other asset managers, including Blackstone Group, Goldman Sachs and Neuberger Berman, offer similar hedge funds for retail customers, seizing on investor demand for portfolios that can diversify their holdings.

Franklin’s first liquid alternatives fund, the Franklin K2 Alternative Strategies fund, was launched in 2013 and now has over $1 billion in assets and returned an average 3.9 percent a year. The Franklin K2 Long Short Credit Fund has returned 5.23 percent since its launch in late 2015 and has $65 million in assets.

Global macro funds have performed relatively better than other liquid alternatives strategies, but they are all lagging the broader U.S. stock market’s performance.

The Wilshire Liquid Alternative Global Macro Index is up 1.45 percent since January, outperforming the Wilshire Liquid Alternative Index, which has gained 0.85 percent since January. The broader Standard & Poor’s 500 stock market index has climbed 7.7 percent this year.

Wilshire tracks some 97 Global Macro liquid alternative funds overseeing $54 billion in assets.

Editing by Jeffrey Benkoe

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