Manager review
Scott Thiel has been the Blackrock fund manager since October 2011. He also serves as the deputy CIO of the Blackrock fundamental fixed income team. He joined in 2002 after spending 13 years in Goldman Sachs.
Lead manager of the Templeton fund is Michael Hasenstab, CIO of the global bond team and “a renowned figurehead of fixed income investment in the marketplace”, noted Ng.
He has been running the fund since 2002 and has worked at the firm since 1995 with time off for work on a PhD.
Hasenstab was later joined by co-manager Sonal Desai, director of research at the Franklin Templeton fixed income group in 2011.
Fees
The latest ongoing charge of the Templeton fund (Class A Mdis USD) is 1.4%, much lower than the 2.23% charged by the Blackrock (Class C1 USD) product. Blackrock is high compared to the category average, which stands at around 1.45%, Ng noted.
Templeton could have an advantage due to its fund size, which would allow it to bring down the cost further, he added.
As of end of November, the Templeton fund had $18.3bn of assets under management versus Blackrock’s $573.2m.
Conclusion
FE gives the Blackrock fund a four-crown rating and only one crown for the Templeton fund, indicating that the former posted much better risk-adjusted performance in terms of alpha, volatility and consistency over the last three years, Ng said.
Templeton could have a chance to perform better if inflation expectations is met, he noted.
“Despite both teams foreseeing a steepening yield curve, it is highly unlikely that the Blackrock fund will reduce its duration to a level which the Templeton fund is positioned,” he explained.
“Overall, the BlackRock fund sits well as a core fixed income position in the fixed income sleeve of the portfolio, as it has been managed well to maintain low volatility, and adds value via adjusting the allocation and selection against the benchmark.
“On the other hand, Templeton suits better as a satellite for investors to exploit long term opportunities that emerge from yield curve positioning, currency ideas and security selection fronts. It could be a good diversifier too as the fund has been delivering very low correlation with major global government bond indices.”
