New Fund Seeks Long-Term Total Return Through Broad Exposure to the Commodities Market
SAN MATEO, CA -- (Marketwired) -- 01/14/14 --
Franklin Templeton Investments today announced the launch of a commodities fund to be managed by Pelagos Capital Management, LLC, ("Pelagos") an alternative investments specialist acquired by Franklin Resources, Inc. in 2013. The Franklin Pelagos Commodities Strategy Fund (the "Fund"), is a liquid commodities fund available to US investors. The Fund seeks long-term total returns by investing in the commodities market through commodity-linked derivative instruments. The Fund seeks to diversify investor portfolios through an alternative asset class that has historically offered low correlations to traditional asset classes, such as stocks and bonds.
"We're pleased to now offer our strategy through a mutual fund to U.S. investors. While commodities have traded for centuries, the costs and logistical challenges of direct investment in physical commodities can be daunting," said John Pickart, CFA1, co-lead portfolio manager and co-founder of Pelagos Capital Management. "We believe this fund, which provides daily liquidity, offers a convenient way for investors to access this market and the potential to bring added diversification, inflation protection and global growth to their portfolios."
The Fund's managers utilize an active, flexible approach to uncover opportunities within areas of the commodities market, including the energy, industrials, precious metals and agriculture subsectors, in relation to the Dow Jones-UBS Commodity Index, the Fund's benchmark. The Fund's managers will make active portfolio construction decisions regarding sector allocations, individual commodities, spot versus future price judgements and seasonal issues. To help manage volatility and satisfy asset coverage requirements for derivative positions, the Fund also invests in securities of the U.S. government, its agencies and other fixed income securities.
"Commodities exposure can serve as an important inflation hedge for investors looking to offset increasing commodity prices in their day-to-day lives," Pickart added. "We believe that commodities prices -- whether for oil, corn or other staples -- have the potential to trend higher, prompted by macroeconomic factors including global population increases, economic expansion and urbanization trends."
Stephen Burke, co-lead portfolio manager and co-founder of Pelagos Capital Management, said, "While the potential benefits of investing in commodities are clear, investing in the market itself can be quite complex. For example, the energy, industrials, precious metals and agriculture markets are driven by a wide variety of factors, so their performance has tended to diverge significantly. A host of dynamics can present short-term opportunities with long-term impact, including seasonal trends, supply and demand dynamics, inconsistencies in exchange prices, and differences between spot versus future prices."
Based in Boston, MA, Pelagos is a boutique investment manager supported by the depth and global resources of Franklin Templeton. Pelagos' mission is to help create and manage alternative investment solutions that seek to enhance overall returns and lower portfolio volatility. Pelagos' management team has significant industry experience and extensive backgrounds in managing commodities strategies and asset allocation. Pelagos was founded as an independent investment advisor in 2005 by Stephen Burke and John Pickart.
Pelagos manages three distinct alternative investment capabilities including commodities, managed futures, and hedge fund replication strategies. The Pelagos team implements an investment process highlighted by a top-down approach to global macroeconomics and quantitative-focused models based on fundamental analysis, disciplined multi-level risk controls, and institutional-quality implementation and transparency.
In addition to the commodities and managed futures strategies of Pelagos Capital Management, Franklin Templeton's alternative investments and solutions offerings include:
- Global asset allocation and solutions capabilities of Franklin Templeton Solutions;
- Integrated hedge fund solutions of K2 Advisors;
- Emerging markets private equity and capabilities of Darby Private Equity and Templeton Emerging Markets Group;
- Global property and real asset offerings of Franklin Templeton Real Asset Advisors; and
- Selected global macro strategies of Franklin Templeton Fixed Income Group.
About Franklin Templeton Investments
The Fund's principal underwriter is Franklin Templeton Distributors, Inc., a wholly owned subsidiary of Franklin Resources, Inc. (NYSE:BEN), a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Bissett, Fiduciary Trust, Darby, Balanced Equity Management K2 Advisors and Pelagos investment teams. The San Mateo, CA-based company has more than 65 years of investment experience and over $879 billion in assets under management as of December 31, 2013. For more information, please call 1-800/DIAL BEN® or visit franklintempleton.com.
Connect with Franklin Templeton on Twitter (@FTI_US), Facebook and YouTube (FranklinTempletonTV).
All investments involve risks, including possible loss of principal. Investing in physical commodities, either directly or through complex instruments such as commodity-linked total return swaps, commodity futures, commodity index futures and options on commodities and commodities index futures, presents unique risks, is speculative and can be extremely volatile. Market prices of commodities may fluctuate rapidly based on numerous factors, including: changes in supply and demand relationships; weather; agriculture; trade; domestic and foreign political and economic events and policies; diseases; pestilence; technological developments; and monetary and other governmental policies, action and inaction. Derivatives involve costs and can create leverage in the fund's portfolio, which may result in significant volatility and cause the fund to participate in losses (as well as gains) in an amount that exceeds the fund's initial investment. The fund may not achieve the anticipated benefits; and may realize losses when a counterparty fails to perform as promised. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the fund adjust to a rise in interest rates, the fund's share price may decline. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks which are heightened in developing countries. These and other risk considerations are discussed in the fund's prospectus.
Investors should carefully consider a fund's investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/(800)342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.
1. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
Copyright © 2013. Franklin Templeton Investments. All rights reserved.
Franklin Templeton Investments Corporate Communications:
+1 212 632 4238
Source: Franklin Templeton