franklin templeton investments 1 mohieddine kronfol chief investment officer global sukuk and mena...
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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
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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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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
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Global Financial Assets (USD 220 Trillion)22% of which is managed by asset managers
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Source: McKinsey Global Asset Management Database
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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
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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
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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
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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
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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”
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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
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Alternative Strategies
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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
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Islamic Asset Management Landscape
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Source: Eurekahedge, Zawya, Ernst & Young – The Islamic Funds & Investments Report 2011
*Note: Other includes alternative investments and feeder funds
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Your Questions Please …..
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