Templeton Global Bond Fund

Fund Overview

For years, the Templeton Global Bond Fund has been a model of consistency. The fund’s research team scours the globe in search of government bonds with attractive valuations.

As of April 04, 2012, the fund has assets totaling $61.61 billion. Its portfolio consists almost entirely of investments in bonds from countries throughout the world.

Manager Michael Hasenstab is betting big on emerging markets. The fund is underweight traditional sectors like the eurozone, Japan, and the United States. A large part of the fund's total assets are invested in Asia and other emerging markets as well as developed markets with low debt-to-GDP ratios like Australia.  “While emerging markets suffered from the collapse in global trade earlier this year, their economies tend to be healthier and their financial systems stronger and un-impaired, in contrast to their developed markets counterparts,” Hasenstab wrote in a statement. The fund has returned 2.28 percent over the past year and 11.80 percent over the past three years.

The fund has a fairly large weighting in emerging markets bonds, which hurt it somewhat during the downturn but is now paying off. Hasenstab sticks mostly to foreign government debt and doesn’t dabble in corporate bonds to avoid credit risk. He also uses a wide range of currency hedges. “They’ll invest in bonds in countries where they believe the currencies are the most attractive,” says Dale Carbaugh, an analyst at Raymond James. In recent years, the fund has shown that it can withstand bear markets and outperform peers during bull markets. The fund has returned 10.11 percent over the past five years and 11.50 percent over the past decade.

Investment Strategy

According to the fund’s prospectus, most of its assets are in investment-grade bonds—mainly government bonds—in at least three countries. Hasenstab says the fund has investments in more than 100 countries as well as a number of different currencies.

Role in Portfolio

Morningstar assigns the fund a "supporting player” role.

Fund Opinion

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2012-03-09

Management

Fund manager Michael Hasenstab has been with the fund since 2001. He is supported by a team of analysts in cities throughout the world.

In the annual Lipper/Barron’s Fund Families Survey for 2009, Franklin Templeton Funds ranks 17th out of 61 fund families surveyed.

Morningstar gives this fund a stewardship rating of B on a scale of A to F, saying, “This fund has the backing of a sound and stable corporate culture, and benefits from the firm's extensive analyst staff and overall prudent investment philosophy. ”

Morningstar

Performance

The fund has returned 2.28 percent over the past year, 11.80 percent over the past three years, 10.11 percent over the past five years, and 11.50 percent over the past decade.

Hypothetical Growth of $10,000

Updated 03.31.2012

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 4 for one year, 1 for five years, and 1 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2012-03-09

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Holdings

As of the end of 2009, the fund’s largest percentage of holdings were in developed Asian economies, followed by holdings in the United States, according to Standard and Poor’s. The fund is fairly diversified with assets spread throughout world, including emerging markets.

Asset Allocation

	% Long	% Short	% Net
Cash	49.38	0.0	49.38
Stocks	0.0	0.0	0.0
Bonds	2.83	0.0	2.83
Other	0.0	0.0	0.0
Foreign Bonds	48.74	0.95	47.79
Foreign Stocks	0.0	0.0	0.0
Convertible	0.0	0.0	0.0
Preferred	0.0	0.0	0.0

Updated 12.31.2011

Top Holdings

Performance as of 03.31.2012

Portfolio as of 12.31.2011

	% Net Assets
Korea(Republic Of) 3%	3.11
Korea(Republic Of) 3.75%	2.38
Poland(Rep Of)	1.81
Hungary Rep 6.375%	1.53
Mexico(Utd Mex St) 8%	1.45

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Fees

Templeton Global Bond Fund has an expense ratio of 0.88 percent.

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Risk

There is some volatility risk, as the fund has holdings in emerging markets as well as exposure to a wide range of currencies.

The fund's Value Line Risk Rank, a measure of volatility, is 4 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2012-03-09

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