Fund Description

The fund seeks total return over a complete market cycle (through a combination of current income, capital preservation and capital appreciation), by allocating its assets across multiple alternative fixed income and credit strategies.

Strategy Statement

"Dynamically allocating among carefully selected alternative managers, we pursue opportunities across multiple fixed income and credit strategies while diligently managing their associated risks."

Management

Robert Christian

Robert Christian

  • Joined Franklin Templeton in 2010
  • Managed Fund Since 2015
Brooks Ritchey

Brooks Ritchey

  • Joined Franklin Templeton in 2005
  • Managed Fund Since 2019
Art Vinokur

Art Vinokur

  • Joined Franklin Templeton in 2004
  • Managed Fund Since 2019

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Investment Philosophy

Our investment philosophy is to work to deliver total returns by seeking to produce attractive risk-adjusted returns with lower correlation to traditional fixed income asset classes and reduced volatility. We believe that active risk management, rigorous manager research and active strategy allocation are key to a successful multi-manager alternatives fund.

Investment Process

K2 Advisors (K2) combines manager research with strategy allocation analysis to contruct a dynamic multimanager fund that seeks to reduce downside risk while providing return potential from a complementary alternative source of returns.

  • Dynamic alternative strategy allocation analysis is performed from a top-down perspective. Through this analysis, K2 seeks to identify factors influencing returns and risks across market cycles.
  • Utilizing holdings-based transparency, K2 seeks to identify alpha-generating managers through manager research and monitoring. On an ongoing basis, K2 then monitors each manager’s market exposures as well as operational and headline risks.
  • K2’s portfolio construction process aims to manage overall portfolio exposures and risks through extensive modeling and scenario analysis.

A Diversified Alternative Fixed Income Solution

Rating

Overall Morningstar Rating As of 10/31/2019

Rating Category: Long-Short Credit

Morningstar
The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating As of 10/31/2019

Years Ratings Funds
in category
3
4 Stars
37
5
Stars
10
Stars

Morningstar Style Box

We do not publish a style box for this fund.

Strategy, Benefits, Results

Strategy

  • Aims to add value via active management of investments across a variety of fixed income and credit strategies in a multi-manager fund structure
  • The fund managers are*:
    • Apollo Credit Management, LLC
    • Candlewood Investment Group, L.P.
    • Chatham Asset Management, LLC
    • Ellington Global Asset Management, LLC
    • EMSO Partners Limited

* Manager roster includes managers that have been appointed as sub-advisors or managers of investment funds. K2 may determine in its sole discretion to not allocate to one or more of the managers and or to add new managers. Accordingly, the manager roster is presented for illustrative purposes only, and should not be viewed as predictive of the ongoing composition of the fund's portfolio, which may change at any time.

Benefits

  • Fixed Income Alternative. An investment in alternative fixed income strategies provides investors’ fixed income allocations an alternative source of returns that often moves independently of the broader fixed income markets.
  • Focus on Risk Adjusted Performance. K2’s fund managers focus on trying to participate in market upturns while seeking to limit the impact of negative market events that can be damaging to fixed income investments.
  • Access to Hedge Strategies. K2’s robust manager research process seeks to provide access to a talented group of hedge fund managers and strategies.
  • Disciplined Capabilities Steeped in Experience. Built with 20 years of experience, K2 focuses on manager research, strategy allocation and portfolio construction within a culture deeply focused on managing risk.
  • Risk Management. The investment team applies extensive risk processes, systems and data to help ensure risks can be continually measured, monitored and managed.

Selling The Fund

  1. Emphasize how the fund’s alternative strategies may provide diversification for existing fixed income investments.

  2. Discuss K2’s focus on seeking out opportunities for strong risk-adjusted performance.

  3. Highlight K2’s experience working with hedge managers and their strategies, and the organization’s commitment to risk management.