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Franklin Templeton launches credit liquid alternatives fund

Franklin Templeton Investments has soft launched the Long Short Credit fund, which will use underlying fund managers to invest in a range of instruments.

A sub-fund of the firm’s Luxembourg-registered Sicav range, the product seeks total returns through income, capital preservation and appreciation, and charges a flat management fee.

The fund is the third liquid alternatives offering by the firm, following the launch of the Global Macro Opportunities fund last month.

The fund management team will be led by David Saunders, founding managing director of K2 Advisors, Franklin Templeton's hedge fund arm. He will be supported by Rob Christian, senior managing director, Jeff Schmidt, managing director of portfolio construction, and Charmaine Chin, managing director. The team plan to utilise underlying sub-advisors to invest in a wide range of fixed income securities, such as corporate bonds and asset-backed securities.

The strategy may also utilise interest rate swaps, derivatives, futures, ETFs and indices, among other instruments.

Saunders said hedged fixed income strategies typically attempt to generate returns by exploiting inefficiencies and price differentials between fixed income and related securities, through long and short positions. They attempt to dampen volatility through the hedging exposure to factors such as duration, market risk, issuer-specific risk or interest rate risk.

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