Model Portfolio is available through Morgan Stanley Smith Barney LLC's Select UMA Investment Advisory program ("Select UMA"). The Important Information and Disclosures found at the following link are an integral part of this document and should be read carefully https://www.morganstanley.com/wealth-disclosures/disclosures#23. For more information on Select UMA, please click here http://www.morganstanley.com/wealth-investmentsolutions/pdfs/adv/uma_adv.pdf.
Model Portfolio Construction:
The Franklin Templeton Investment Solutions (FTIS) model portfolio construction process consists of an assessment of specific model parameters and goals, including allocation targets, volatility limits, income levels, and investable regions, as well as other objectives or constraints. Longer-term strategic asset allocation and shorter-term views provide an allocation framework for each model. Portfolio managers customize model allocations according to specific objectives including a wide range of targets for growth and income as well as risk expectations. Managers also consider fund recommendations from the FTIS manager research to find the right fit for each model. FTIS portfolio managers review models regularly, applying the team's latest views to each model.
While FTIS takes an active approach to fund selection by comparing the attractiveness of in-house funds with third-party managers to support potential alpha creation, the model portfolios focus on, and often consist largely of Franklin Templeton proprietary funds. As part of the portfolio construction analysis, portfolio managers consider several key factors when selecting underlying investments. The criteria used may include, but are not limited to: dealer platform constraints, underlying currencies, volatility ranges, the mix of active and passive strategies and/or an allocation mix of Franklin Templeton and third-party funds. Considerations such as investment objectives, competitive rankings and positioning, expense ratio cap, historical risk and returns are additional factors that may be used for final fund recommendations and allocations.
Potential Conflicts Of Interest:
Franklin Templeton may not receive a fee for developing and updating these model portfolios, however, Franklin Templeton has a financial interest in the models as they include funds for which Franklin Templeton serves as investment advisor, and from which Franklin Templeton or its affiliates receives fees for investment management, shareholder servicing, and transfer agent services.
Suitability/Recommendations:
Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for any specific security, strategy or investment product or service.
There can be no assurance that any or all funds included in the models will be available for investment. An investment in any fund that appears in a model is subject to satisfaction of eligibility and applicable account opening requirements, for which Franklin Templeton takes no responsibility. The model portfolios described may not be appropriate for all investors or available for investment to all investors.
Neither Franklin Templeton nor its affiliates conducts investor suitability analysis regarding the models or their underlying investments. Suitability determination is the responsibility of the financial professional or sponsor firm.
Risks of the Underlying Investments:
All investments involve risks, including possible loss of principal. These models include funds which engage in a variety of investment strategies involving certain risks. The model's risks are directly related to the risks of the underlying funds and may include, but is not limited to, the risks as described below. Model allocation strategies are not designed to maximize return or predict the highest performing fund or group of funds within each class in the model. There are expenses associated with the underlying funds in addition to any fees charged by the sponsor firm.
Equity: Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Securities may not increase in price as anticipated or may decline further in value.
Fixed Income: Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline.
Foreign: Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments.
Emerging Markets: Investments in emerging markets involve heightened risks related to the same factors, in addition to those associated with these markets' smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets.
Exchange Traded Funds: ETFs may be bought or sold throughout the day in the secondary market, but they are generally not redeemable by retail investors for the underlying basket of securities they track.
Diversification: Asset allocation and diversification do not ensure a profit or protect against loss.
Additional Information:
The Franklin Templeton Model Portfolios are provided on a non-discretionary basis to sponsor firms and Financial Professionals on whose platform the models are available. It is the sponsor firm/Financial Professional that has investment authority and discretion over accounts on their platform. The Franklin Templeton Model Portfolios are not available as investable products through Franklin Distributors, LLC.
The Model Portfolios may be offered with different share classes and/or placed on trading platforms that require changes such as an allocation to cash and a pro rata allocation of the remainder according to the Model Portfolio(s). These modifications will change reported specifics such as performance, estimated portfolio yield, etc. Refer to the materials and terms of the offering and/or platform for additional information.
The composition of the models may change without notice. Investment allocations may not achieve model objectives and actual underlying fund allocations may vary over time as markets change. Any periodic rebalancing or allocation changes to the models are initiated by and at the discretion of FTIS.
Please note that allocation changes to the underlying funds for some of the models may also be made at the discretion of the sponsor firm or Financial Professional.
This communication is general in nature and should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Franklin Templeton does not provide legal or tax advice.
Entities/Affiliates:
Franklin Distributors, LLC (FD, LLC) is the principal distributor of Franklin Templeton's U.S.-registered funds.
FTIS is a global investment management group dedicated to multi-strategy solutions. On October 1, 2020, QS Investors, LLC combined with Franklin Templeton Multi-Asset Solutions (FTMAS) to form Franklin Templeton Investment Solutions (FTIS).
FD, LLC and FTIS are Franklin Templeton companies.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Franklin Distributors, LLC. Member FINRA, SIPC All rights reserved.
Franklin Distributors, LLC and Franklin Templeton Investment Solutions are Franklin Templeton affiliated companies.
