HEAD-TO-HEAD: Jupiter vs Franklin Templeton

123456

The Jupiter fund posted consistent outperformance against the category average and the Templeton fund on a one-, three- and five-year basis.

“Despite the underperformance, the Templeton fund has been strong on a long-term basis, which also echoes the long-term view of the fund’s investment team,” Ng said.

He also noted that the different investment focus of the Templeton fund compared to peer funds has contributed to the variation in performance.

For instance, Ng said, the Jupiter fund benefitted from its holdings in long-dated government bonds issued in New Zealand and Australia, which drove outperformance in 2015. Over the same period, the Templeton fund suffered from its emerging market holdings because global investors dumped Mexican and Brazilian bonds over debt concerns.

Due to the emerging market fluctuations, the Templeton fund has been more volatile than the Jupiter fund over a three-year period. The cumulative volatility was 9.13% while that of the Jupiter fund was 1.94%, according to FE.

“The heavy exposure to relatively riskier markets and the short positions in currency have added volatility to the fund,” he said.

However, the Templeton fund has a minimal interest rate sensitivity due to its negative average duration, according to Ng. “As the Templeton fund has maintained an ultra-low duration, it is less impacted by interest rate movements,” he added.

Comparatively, the Jupiter fund has an average duration of 5.4 years, which results in much higher interest rate risk.

In terms of credit rating, the Templeton fund is more aggressive in lower-grade bonds. The portfolio therefore carries higher default risk than the Jupiter fund.

Templeton’s approach results in a higher yield-to-maturity. Currently it is 9.4% compared to Jupiter’s 4.18%, according to the most recent fund factsheets.

123456