HEAD-TO-HEAD: Ashmore vs Templeton

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Both the Ashmore and the Templeton funds are fixed income emerging market blended funds, which invest in all types of fixed income across all emerging markets.

While both funds combine macro assessments with bottom-up security selection, each fund has a different investment approach, according to Broussard.

The Ashmore fund’s philosophy is to always outperform its benchmark, while the Templeton fund is benchmark-agnostic and tends to look more for total return in upmarkets and preservation of capital in downmarkets.

Although the Ashmore fund has a blended benchmark index (50% JP Morgan EMBI Global Diversified Index, 25% JP Morgan EMBI Plus Index and 25% JP Morgan GBI-EM Global Diversified Index), its high-conviction approach can result in strong bets against the benchmark. Deviations are strong against regional, sector, security, credit quality and especially country allocation.

The strategy also has a value-driven approach, which makes the fund include securities less popular with investors.

By comparison, the Templeton fund also has a benchmark index – the JPM EMBI Global Index. However, the fund is benchmark agnostic, Broussard said, noting that the fund’s index is more applicable to emerging markets hard currency bond funds.

Like the Ashmore fund, its high-conviction approach can result in huge deviations from the benchmark and the peer group.

What makes the Templeton fund stand out from the Ashmore fund and the other funds in the peer group is its low bond duration, according to Broussard.

The duration of the Templeton fund is 1.79 years, while the peer average is close to 6 years, according to Broussard. The Ashmore fund’s bond duration is close to the peer average, which is at 5.6 years.

“Most strategies in the universe tend to limit the deviation from the benchmark to two years duration, generally keeping it within one year or less,” she said.

Given the high-conviction approach of both strategies, both funds have very different country allocations when compared with each other and with the peer group index.

Top five country allocations:

Source: Allfunds

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