When the January 2023 Securities and Commodities Authority (SCA) regulation disallowing promotion of foreign funds to UAE retail investors finally came into effect in April this year, Franklin Templeton was one of the first global asset management companies that stepped up to the plate to meet the needs of domestic investors. The firm launched seven feeder funds domiciled in Dubai International Financial Centre, boosting the local asset management industry and contributing towards the objective behind SCA’s revamping of investment fund rules.
For UAE retail investors who do not fall under the professional investor category, the move opened up new investment opportunities.
"The introduction of these funds is timely given the increasing demand for multi-asset income, global and regional fixed income, technology as well as Sharia-compliant strategies," says Amar Mehta, Head of Retail, Gulf, Eastern Mediterranean and Africa at Franklin Templeton.
Here we explore the five key competitive advantages domestic retail investors get to enjoy with Franklin Templeton’s feeder funds.
1. Invest global
When the extension of grace period for the SCA regulation on foreign funds ended on March 31 this year, retail investors – who make up most of the investor base – couldn’t directly invest in a foreign fund. Under the new regulations, they can only access foreign investment funds through locally domiciled feeder funds. By launching local funds that feed into foreign master funds, Franklin Templeton has democratised the process of investing where domestic retail investors can easily access feeder funds through locally licensed promoters such as banks. “We have a distribution relationship with most of the banks that are active in the wealth management space in the UAE, be it Islamic or conventional,” explains Mehta. “Many of the banks such as HSBC, RAKBANK, Mashreq and Dubai Islamic Bank, to name a few, have already gone live with the feeder funds with more to follow.”
2. Build a diverse portfolio
Drawing from its nearly 25 years of experience in the local market, Franklin Templeton has put together the seven feeder funds to cater to the needs of the UAE investor base characterised by a large expatriate population comprising different nationalities. It has tailored its offering under two umbrellas, Franklin Templeton Investments Feeder Funds (FTIFF) and Franklin Templeton Shariah Feeder Funds (FTSFF), taking into account prior demand as well as factors that are of strategic importance to domestic retail investors. These feeder funds invest in the respective Franklin Templeton’s Luxembourg- and Ireland- domiciled UCITs funds.
“Multi-asset continues to be the biggest flavour in this part of the world,” says Mehta, “so we've launched a multi-asset income strategy, which is FTIFF Franklin Income Fund." This fund looks at maximising income while maintaining capital appreciation through investments in equity and long- and short-term debt securities. “Considering the population that is also interested in faith-based investing here, we've launched two Shariah compliant solutions, FTSFF Franklin Shariah Global Multi-Asset Income Fund and FTSFF Franklin Global Sukuk Fund,” he adds.
In equity, domestic retail investors have a choice of two funds. Designed to cater to their affinity for US equities, FTIFF Franklin US Opportunities Fund invests in innovative small, medium and large cap US companies across a wide range of sectors that show exceptional growth potential. The second fund in this category, FTIFF Franklin Technology Fund invests at least two-thirds of its assets in companies that are expected to benefit from technology.
With cuts in interest rates expected over the next few years, fixed income strategies have also received ample consideration with FTIFF Brandywine Global Income Optimiser Fund and the regional FTIFF Franklin Gulf Wealth Bond Fund.
3. Best-in-class strategy and global expertise
By investing in Franklin Templeton’s feeder funds, domestic retail investors can tap into the firm’s best-in-class strategies and global expertise. “They can experience increased ease of access to a range of strategies run by Franklin Templeton’s long-tenured investment teams across different asset classes, sectors and geographies,” explains Mehta.
From active professional management to risk mitigation, UAE retail investors can benefit from the sound investment decisions and expertise of Franklin Templeton’s fund managers.
4. In-house platform
While many of the global asset managers resort to a third-party platform to offer feeder funds in the UAE, Franklin Templeton has curated and created its own platform drawing from its local experience and knowledge. It shows the firm’s in-house capabilities.
5. Affordability
The minimum threshold of $1,000 (Dh3,670) with no upper limit ensures the feeder funds remain accessible and affordable to retail investors. “These funds have been meticulously curated to closely mirror their master funds, from a look, feel and pricing perspective,” says Mehta. “We've capped the expenses of the feeder funds to ensure there is accessibility as well as affordability for the retail investor.”
With a range of strategies available, from income to growth, Franklin Templeton's feeder funds offer domestic investors the opportunity to optimise investments across markets and sectors and achieve their financial goals.
Investors should reach out to locally licensed promoters for their investment needs and seek investment advice before making a decision to invest.
Disclaimer
Franklin Templeton Investments Feeder Funds Open-ended PCC PLC is domiciled in the Dubai International Financial Centre. The sub-funds launched under this PCC are dedicated to investing in the respective master funds viz. Franklin Templeton Global Funds plc – Brandywine Global Income Optimiser Fund and Franklin Templeton Investment Funds - Franklin Gulf Wealth Bond Fund, Franklin Income Fund, Franklin Technology Fund and Franklin US Opportunities Fund.
Franklin Templeton Shariah Feeder Funds Open-ended PCC PLC is domiciled in the Dubai International Financial Centre. The sub-funds launched under this PCC are dedicated to investing in the respective master funds viz. Franklin Templeton Shariah Funds - Franklin Global Sukuk Fund and Franklin Shariah Global Multi-Asset Income Fund.
This material does not constitute investment advice or an invitation to apply for any funds. Investors should seek professional financial advice and obtain a full explanation of any proposed investment before making a decision to invest. Investments involve risks. The value of investments can go down as well as up, and investors may not get back the full amount invested. Not all products and services available in all jurisdictions.
Past performance of master funds is not an indicator or a guarantee of performance of FTIFF and FTSFF funds. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. There is no guarantee that funds will meet its objectives. Read all fund related documents carefully before making a decision to invest.
Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority.
