In both 2001 and 2002 – two strong years for value investing – the fund’s returns were among the top 10% in its Global Equity category while volatility remained slightly below the category average.
An underweight position in American shares has helped in this respect – currently only 31% of the equity weighting. A generous sprinkling of German government bonds has also supported performance. Finally, a relatively high cash position has been benefici
al in the recent bear market.
Templeton has historically been committed to value investing even though the name of the fund may imply the opposite. This philosophy also applies to this fund, a flagship product. The average price-to-book ratio is quite low at only 2.5. Little surprise then, that shares from the consumer staples and utility sectors play an important role in the portfolio.
Large firms dominate the fund’s 100 share positions with less than 10% invested in mid- and small-capitalisation offerings. The regional allocation shows Japan underweighted, as well as America. However, Mr Murchison has recently increased to his exposure to Japanese shares. He has added Nintendo, an electronic gaming company, considering it attractive on a valuation basis.
However, the manager is in no rush to spend his cash position of over 11%. He continues to be sceptical towards technology shares and American issues in general.
The fund is run in the same style as its American counterpart though its portfolio will vary slightly. Also its €1.5 billion (£1.03 billion) size makes it more easily manoeuvrable than the $12 billion (£7.63 billion) behemoth from America.
Just as it was foolish to write off this fund after the growth craze of the late 1990s it should not be hailed as a one-size-fits-all solution now. The fund may continue to underperform in growth-driven markets in the future. However, value fans with a long-term time approach to investing are likely to be rewarded with a consistently and carefully managed fund offering.
