"Market Monitor"-Michael Hasenstab, Portfolio Mgr. Templeton Global Fund
Friday, April 04, 2008PAUL KANGAS: My guest "Market Monitor" this week is Michael Hasenstab, the portfolio manager for the Templeton Global Fund. Welcome to your first visit with us on NIGHTLY BUSINESS REPORT Michael.
MICHAEL HASENSTAB, SR. VP, PORTFOLIO MGR., TEMPLETON GLOBAL BOND FUND: Thank you, a pleasure to be here.
KANGAS: Your Templeton Global Bond fund (TPINX) did very well in 2007 with a total return of nearly 11 percent. Tell us what strategy you employed to produce such good results.
HASENSTAB: You know, the key tenet of our strategy is really to take a broad global diversified approach so we had exposures in investments in over 20 different countries, investments in different currencies, interest rates, sovereign credit markets and that diversification really helped us weather a pretty volatile period in 2007. We also kept the average credit quality fairly high, a double A-minus and took advantage of some of the opportunities with regard to Asian currencies and some of the European currencies versus the dollar.
KANGAS: Interesting. How did the fund perform in this year's rough- and-tumble first quarter?
HASENSTAB: It's been a tough environment but the fund is up a little over 6 1/2 percent through the first quarter of 2008. So again, that same strategy of diversification and looking at some of these opportunities in Asia and Europe has paid off.
KANGAS: Very good. Now over the last several years, the fund has had very little exposure to the U.S. dollar. Are you anticipating any change in that strategy?
HASENSTAB: You know, one of the advantages of the global bond fund is we can look for not just currency opportunities versus the dollar, but we can look for currency opportunities versus the euro or versus the yen, so there's a lot of flexibility. I think going forward increasingly the focus will be on Asia and in some of the peripheral European markets, as opposed to the past couple years where the euro took the lion's share of the opportunities.
KANGAS: What country's bonds do you like because of their currencies right now?
HASENSTAB: In terms of the currency side, some of our favorites are in Scandinavia, Norway, Sweden. Also we like the dynamic economies of central Europe, such as Poland. We also like some of the safe haven currencies, the Swiss franc and the Japanese yen. Both the Swiss franc and the Japanese yen have performed very well year to date in this period of market volatility. In terms of bond markets though, we're positioning for what we expect to be as a recoupling of global growth. In the last quarter or last six months, the focus has really been on the U.S. slowdown. Ultimately we think that slowdown will spread to other parts of the world and so we're looking for markets which have not yet priced in that slowdown, but we believe is forthcoming.
KANGAS: What kinds of bonds do you favor with regard to credit quality and issuers, that is to say, do you buy only government bonds or corporates as well?
HASENSTAB: The strategy in this fund is to really focus on government bonds, so we're looking at local and externally issued government bonds and that's been our focus. The average credit quality is fairly high, double A-minus of the total portfolio, so generally a higher quality government bond.
KANGAS: That is quality. How many different bonds does the fund own right now?
HASENSTAB: In terms of our current - our country exposure, it's over 20 different countries, over 10 different currencies. The number of positions in the portfolio is over 100 so it's a pretty well diversified portfolio. It's split between Asia, the Americas and Europe.
KANGAS: And the fund's current allocation between bonds and cash is what?
HASENSTAB: The fund is pretty well fully invested. So close to about 95 percent of the fund is in bonds. And those, of course, will be a range of maturities. In some countries, we want to protect against inflation risks, so we're very short-duration assets.
KANGAS: Understood.
HASENSTAB: In some countries, we want to take longer-duration exposure, such as a place like Mexico and so it will really vary across countries.
KANGAS: Our time is very short, the fund's Internet ticker symbol is TPINX, correct?
HASENSTAB: That's correct.
KANGAS: There we see a chart which is showing ascending value. Is there a minimum investment to buy the fund?
HASENSTAB: I think it's $1,000 minimum investment.
KANGAS: Michael, our time has run out, but I want to thank you very much for sharing your thoughts with us.
HASENSTAB: It was my pleasure. Thank you.
KANGAS: My guest, Michael Hasenstab of the Templeton Global Bond Fund.
