Franklin Long Duration US Government/Credit

Long duration investment-grade fixed income strategy that invests in U.S. government securities and investment-grade corporate debt.

OVERVIEW

STRATEGY SUMMARY

  • Focuses on duration, yield curve, sector allocation and issuer selection through a risk-managed, top-down/bottom-up approach.
  • Invests primarily in U.S. government securities and investment-grade corporate debt.
  • Seeks to determine the most attractive investment opportunities and formulate what we consider the optimal risk/return profile.

BENCHMARK

  • Bloomberg Barclays U.S. Government & Credit - Long Index

OUR APPROACH

Investment Philosophy

We believe that a portfolio built around a diversified set of active management positions has the potential to generate attractive information ratios over a full market cycle. We seek to accomplish this by implementing a large number of small, low-correlated active positions, thus reducing the risk of poor performance from any single active position. Our global aggregate framework, significant bottom-up resources, and integrated quantitative group are designed to identify market inefficiencies which we seek to exploit within a disciplined, risk management process.

Investment Process Summary

Our investment process is structured to pursue diversified sources of alpha across securities, sectors and global markets. We aim to add value by exploiting market inefficiencies through both top-down allocation decisions and bottom-up security selection on a tactical and strategic basis.

  • Duration and yield curve decision: Combine fundamental analysis and econometric models to help determine the optimal duration and yield curve strategy; analysis of fundamental factors includes: monetary and fiscal policy, the economic cycle, macroeconomic disequilibria, political influences, valuations, as well as technical factors.
  • Sector decision: Analyze relative value between investment-grade sectors; quantitative tools used to help determine return and volatility expectations across the term structure of credit spreads, designed to help make relative value judgments between various sectors.
  • Security selection: Dedicated sector specialists focus on distinct segments of the market: credit, mortgages/Asset-Backed Securities (ABS), municipals and emerging market debt; they strive to identify specific undervalued issues for investment within each sector, setting price targets and investment time horizons and use bottom-up strategies involving the relative value analysis of comparable instruments and selection of specific securities considered undervalued that should, in our view, provide the best expected risk/return trade-off.

OUR TEAM

Michael J. Materasso

Michael J. Materasso
Senior Vice President, Head of Insurance Portfolio Management
Franklin Templeton Fixed Income Group
With firm since: 1988

Keyser, Warren

Warren A. Keyser
Senior Vice President, Portfolio Manager
Franklin Templeton Fixed Income Group
With firm since: 1986

Marc Kremer

Marc Kremer, CFA
Vice President, Portfolio Manager, Research Analyst
Franklin Templeton Fixed Income Group
With firm since: 2003