Templeton Asian Growth Fund A. A (Ydis) USD

Transcription

1 Templeton Asian Growth Fund A (Ydis) USD Franklin Templeton Investment Funds Fund Manager Report Value Equity Product Details 1 Fund Assets $4,926,477, Fund Inception Date 04/16/1991 Number of Issuers 53 Bloomberg ISIN Base Currency Investment Style Benchmark Morningstar Category Overall Morningstar Rating TM 3 TEMFREI LX LU USD Value MSCI All Country Asia ex-japan Index Asia ex Japan Equity Asset Allocation 2 % Equity Cash & Cash 0.14 Equivalents Fixed Income Fund Description The fund aims to achieve long-term capital appreciation by investing primarily in equity securities listed in Asia (excluding Australia, New Zealand and Japan). Key Points Asian equities advanced in October, as a group outperforming their global peers. South Korea, India and Taiwan were amongst the top-performing markets in the benchmark, while Pakistan and Malaysia declined. The fund advanced during October, led by South Korea-based holdings, with additional significant support from Thailand and Indonesia. Amongst sectors, positions in industrials, consumer staples and information technology were key drivers of the fund s gains. Regionally, China and Pakistan weighed on absolute performance. Materials was the only detracting sector. Performance Data Performance Net of Management Fees as at 10/31/2017 (Dividends Reinvested) (%) 4 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception (06/30/1991) A (Ydis) USD MSCI All Country Asia ex-japan Index Calendar Year Returns (%) 200% 100% 0% -100% A (Ydis) USD MSCI All Country Asia ex-japan Index Portfolio Manager Insight Market Review Equities in Asia advanced in October, outperforming their emerging-market (EM) peers and developed-market equities. Improved global economic growth and supportive monetary policy continued to fuel market optimism. In addition, Asian equities were driven by generally positive earnings growth, encouraging macroeconomic data, continued asset-class inflows and higher global commodity prices. Most markets in the index advanced, with the strongest returns in South Korea, India, Taiwan and Singapore. Easing geopolitical tensions between South Korea and China and a strong won drove stock prices in South Korea. Positive sentiment in India was driven by the government s plans to re-capitalise state-owned banks. Strength in the information technology (IT) and financials sectors supported the Taiwanese market, while bank stocks bolstered the market in Singapore. China also advanced, as the country held its 19th National Party Congress, headlined by President Xi Jinping s vision and ambitious goal of modernising China by China s third-quarter gross domestic product (GDP) growth was in line with expectations, while other data was generally positive. In contrast, equity markets in Pakistan and Malaysia declined. All sectors in the benchmark advanced, with the strongest returns in health care, IT and energy. Performance Review The fund advanced during October, largely due to South Korea-based holdings, with significant support from Thailand and Indonesia. China was a significant detractor, and Pakistan also dragged on performance. 1. All holdings are subject to change. Holdings of the same issuers have been combined.

2 Several South Korea-based stocks were amongst the largest overall contributors, including real estate developer Hyundai Development, shipbuilder Samsung Heavy Industries, and retailer Lotte Shopping. Positions in Thailand-based real estate developer Land & Houses and commercial bank Kasikornbank drove contribution from that market, though another Thailand-based bank, Siam Commercial Bank, was one of the largest individual detractors. In Indonesia, an investment in heavy equipment maker and coal mining firm United Tractors bolstered returns, but a stake in Bank Danamon detracted, reducing the market s overall contribution. Three China-based holdings were amongst the largest detractors, all likely retreating on profit-taking after recent strong performance. Shares of state-owned aluminium producer Aluminum Corporation of China (Chalco), carmaker and BMW partner Brilliance China Automotive, and coal producer Inner Mongolia Yitai Coal all declined in October. Positions in Pakistan-based holdings, including integrated energy company Oil & Gas Development and financial stock MCB Bank, also weighed on returns. From a sector perspective, investments in industrials drove the lion s share of the fund s gains for the month, followed by consumer staples and IT. Materials was the only detracting sector. Portfolio Positioning During October, energy, financials and consumer discretionary were the largest sector positions. China, Indonesia and Thailand were the largest absolute fund exposures in country terms. These weightings arose from our stock-by-stock fundamental investment metrics as applied to the fund s investment universe. Outlook & Strategy We believe that the recovery in emerging markets, which has been underway since 2016, is showing little sign of abating. GDP growth in Asia is expected to continue to outpace that of developed markets, projected at 6.5% in both 2017 and 2018, compared to just 2.2% for 2017 and 2% for 2018 in developed economies. 5 Stronger economic growth should underpin and drive investors attraction to Asian equities. There may be volatility ahead, but strong economic fundamentals combined with attractive valuations should make Asian markets less susceptible to negative global news flow. Furthermore, we see opportunities for the asset class to grow as many investors are generally underweight to emerging markets overall, below what we would expect given the proportion of global GDP and market capitalisation that emerging markets represent. In our view, reallocations towards Asian equities should support continued flows into related strategies. In addition, Asian currencies are, on average, still undervalued in our view. We see continued tailwinds coming from improvements in corporate earnings, and equities in the region generally continue to trade at a discount to their developed-market peers. We believe that emerging markets should be able to withstand the normalisation of monetary policy in the United States and eurozone. While there has been some concern about rising corporate debt levels in some emerging economies, such as China, the financial situation of most emerging markets remains solid. Further, a strengthening US economy would also bode well for EM equities, given the interdependency between the United States and the rest of the world. Portfolio Characteristics 6,7 Portfolio MSCI All Country Asia ex-japan Index Price to Earnings (12 Month Trailing) 15.14x 15.77x Price to Book Value 1.51x 1.77x Price to Cash Flow 7.92x 10.47x Market Capitalization (Millions in USD) 27,450 94,236 Dividend Yield 2.30% 2.11% Portfolio Diversification Top Sector Contributors 8,8 Total Sector Effect (%) Consumer Discretionary 0.64 Industrials 0.40 Real Estate 0.38 Telecommunication Services 0.18 Utilities 0.06 Contributors/detractors data shown is for the period from 10/01/2017 to 10/31/2017. Top Security Contributors 8,9 Security Total Effect (%) LOTTE SHOPPING CO 1.16 HYUNDAI DEVELOPMENT CO 0.23 LAND AND HOUSES PUBLIC CO 0.16 LTD UNITED TRACTORS 0.13 SAMSUNG HEAVY INDUSTRIES 0.10 CO LTD Top Security Detractors 8,9 Security Total Effect (%) ALUMINUM CORP OF CHINA LTD BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD LOTTE CONFECTIONERY CO BANK DANAMON INDONESIA INNER MONGOLIA YITAI COAL CO LTD templetonoffshore.com 2

3 Geographic Weightings vs. MSCI All Country Asia ex-japan Index 2 China Indonesia Thailand South Korea Hong Kong Pakistan India Taiwan Singapore Vietnam 0.07 Russia 0.02 Cash & Cash Equivalents % 25% 50% Sector Weightings vs. MSCI All Country Asia ex-japan Index 2 Energy Financials Industrials Consumer Discretionary Materials Information Technology Real Estate Consumer Staples Health Care Utilities 2.92 Telecommunication Services 4.29 Cash & Cash Equivalents % 5% 10% 15% 20% 25% 30% 35% 40% Templeton Asian Growth Fund MSCI All Country Asia ex-japan Index Templeton Asian Growth Fund MSCI All Country Asia ex-japan Index Top Ten Holdings 10 Top Holdings Sector Country % ALUMINUM CORP OF CHINA LTD Materials China 8.75 BRILLIANCE CHINA AUTOMOTIVE Automobiles & Components China 7.18 HOLDINGS LTD BANK RAKYAT INDONESIA Banks Indonesia 5.35 PERSERO TBK PT BANK DANAMON INDONESIA TBK Banks Indonesia 4.51 PT OIL & GAS DEVELOPMENT CO LTD Energy Pakistan 4.08 DAIRY FARM INTERNATIONAL Food & Staples Retailing Hong Kong 3.87 HOLDINGS LTD UNITED TRACTORS TBK PT Energy Indonesia 3.69 SIAM COMMERCIAL BANK PCL Banks Thailand 3.45 SAMSUNG HEAVY INDUSTRIES CO Capital Goods South Korea 3.41 LTD KASIKORNBANK PCL Banks Thailand 3.35 Supplemental Performance Statistics 3 Yrs 5 Yrs 10 Yrs Since Inception Standard Deviation (%) Templeton Asian Growth Fund MSCI All Country Asia ex-japan Index Tracking Error (%) Information Ratio Beta Sharpe Ratio Templeton Asian Growth Fund MSCI All Country Asia ex-japan Index Beta, Information Ratio and Tracking Error information are measured against the MSCI All Country Asia ex-japan Index. templetonoffshore.com 3

4 Investment Team Portfolio Manager Years with Firm Years Experience Allan Lam, Senior Executive Vice President Eric Mok, CFA, Senior Vice President Templeton Global Equity Team Number of Members Average Years Experience Portfolio Managers/Analysts Research Analysts templetonoffshore.com 4

5 Important Legal Information This document does not constitute legal or tax advice nor is it investment advice or an offer for shares of Franklin Templeton Investment Funds (the Fund ). Subscriptions to shares of the Fund can only be made on the basis of the current prospectus and, where available, the relevant Key Investor Information Document, accompanied by the latest available audited annual report and the latest semi-annual report accessible on our website or which can be obtained, free of charge, from Franklin Templeton International Services, S.à r.l. - 8A, rue Albert Borschette, L-1246 Luxembourg. Past performance is not an indicator or a guarantee of future performance. The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Investment in the Fund entails risks which are described in the Fund s prospectus and, where available, in the relevant Key Investor Information Document. Special risks may be associated with a Fund s investment in certain types of securities, asset classes, sectors, markets, currencies or countries and in the Fund s possible use of derivatives. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund s holdings at any one time. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be affected by currency fluctuations. Where a Fund invests in emerging markets, this investment can be more risky than an investment in developed markets. No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. Shares of the Fund are not available for distribution in all jurisdictions and prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest. In addition, it should not be assumed that any securities mentioned were or will prove to be profitable. Stocks mentioned in this report are not a solicitation to purchase those stocks, and are examples of some stocks which performed well. Not all stocks in the portfolio performed as well. For the most current information on the fund, please contact your Franklin Templeton marketing representative. Performance figures are not based on audited financial statements and assume reinvestment of interest and dividends. When comparing the performance of Franklin Templeton Investment Funds (the Fund ) with a benchmark index, it is important to note that the securities in which Franklin Templeton Investment Funds invests may be substantially different than those represented by the benchmark index. Furthermore, an investment in Franklin Templeton Investment Funds represents an investment in a managed investment company in which certain charges and expenses, including management fees, are applicable. These charges and expenses are not applicable to indices. Lastly, please note that indices are unmanaged and are not available for direct investment. Certain data and other information shown have been supplied by outside sources. While we consider that information to be reliable, we give no assurance that such data and information is accurate or complete. In the U.S., this publication is made available to you for informational purposes only by Templeton/Franklin Investment Services, Inc. 100 Fountain Parkway, St. Petersburg, Florida Tel: (800) (USA Toll-Free), (877) (Canada Toll-Free), and Fax: (727) Investments are not FDIC insured; may lose value; and are not bank guaranteed. Distribution outside the U.S. may be made by Templeton Global Advisors Limited or other sub-distributors, intermediaries, dealers or professional investors that have been engaged by Templeton Global Advisors Limited to distribute shares of the Fund in certain jurisdictions. This is not an offer to sell or a solicitation of an offer to purchase securities in any jurisdiction where it would be illegal to do so. References to indexes are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. The indices include a greater number of securities than those held in the Fund. An index is unmanaged and one cannot invest directly in an index. The performance of the index does not include the deduction of expenses and does not represent the performance of any Franklin Templeton fund. Past performance is not an indicator or a guarantee of future performance. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at 2. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 4. Source for all information is Franklin Templeton Investments. Benchmark related data provided by FactSet. Past performance is not an indicator or a guarantee of future performance. Periods greater than one year are shown as average annual total returns. Fund performance data include reinvested dividends, and is net of management fees. Sales charges, other commissions, taxes and other relevant costs to be paid by the investor are not included. The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 5. Source: International Monetary Fund, World Economic Outlook, October By International Monetary Fund. All Rights Reserved. 6. The portfolio characteristics listed are based on the fund s underlying holdings, and do not necessarily reflect the fund s characteristics. Due to data limitations all equity holdings are assumed to be the primary equity issue (usually the ordinary or common shares) of each security s issuing company. This methodology may cause small differences between the portfolio s reported characteristics and the portfolio s actual characteristics. In practice, Franklin Templeton s portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The market capitalization figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. Source: Factset. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. 7. The dividend yield quoted here is the yield on securities within the portfolio and should not be used as an indication of the income received from this portfolio. 8. Past performance is not an indicator or a guarantee of future performance. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. Source: FactSet. Important data provider notices and terms available at Total Effect represents the excess return by sector as compared to the index. Performance attribution is calculated in the base currency of the fund. 9. Top Security Contributors and Top Security Detractors are holdings based on the last one month period for rolling months or on the last three months period for quarter end months. These securities do not represent all the securities purchased, sold or recommended for advisory clients, and the reader should not assume that investment in the security listed was or will be profitable. Holdings are subject to change, holdings of the same issuer have been combined. The information provided is not a recommendation to purchase, sell or hold any particular security. Franklin Templeton Investment Funds Offshore 100 Fountain Parkway St. Petersburg, FL templetonoffshore.com 2017 Franklin Templeton Investments. All rights reserved.

6 The security identified does not represent the Fund s entire holdings and in the aggregate, may represent a small percentage of such holdings. There is no assurance that security purchased will remain in the Fund, or that security sold will not be repurchased. 10. Holdings of the same issuers have been combined. Top ten holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the fund s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the fund, or that securities sold will not be repurchased. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included. 12. Information ratio is a way to evaluate a manager s ability to outperform a benchmark in relation to the risk that manager is assuming, with risk defined as deviation from the benchmark. This measure is calculated by dividing the portfolio s excess return (portfolio return less the benchmark return) by the tracking error (derived by taking the standard deviation of the monthly differences between the portfolio return and the benchmark return over time). Franklin Templeton Investment Funds Offshore 100 Fountain Parkway St. Petersburg, FL templetonoffshore.com 2017 Franklin Templeton Investments. All rights reserved.