There was once a time—perhaps not too long ago—when fixed income markets were considered to be the unobtrusive, quiet guest at the dinner party. If equity markets were seen as raucous and exciting, fixed income was instead the steady, sure friend who rarely caused any commotion.
My, how things have changed.
Today, much of the investing world’s news is focused on unexpected developments in fixed income. Roger Bayston, Director of Fixed Income for the Franklin Templeton Fixed Income Group®, chatted with us to discuss some recent fixed income themes.
Beyond Bulls & Bears: Roger, the European sovereign debt crisis has really been dominating the news lately. How do you see that impacting U.S. fixed income markets?
Roger Bayston: Concerns over the European debt crisis and related worries regarding a possible restructuring of some financial institutions’ debt holdings— or even some countries’ sovereign debt— raises questions about expected growth in the United States. That feeds into a cycle where risk-based assets are generally avoided, credit spreads increase, and some investors lose their comfort level in investing in riskier assets. In addition, as investors shun what they perceive as risky assets, there has been a flight to assets seen as safer— such as Treasuries. This has kept long-term U.S. government interest rates low, despite the recent credit downgrade. Read more…
As global markets are roiled by some serious concerns, we at Beyond Bulls & Bears feel it’s a valuable time to take a deep breath and reflect on the sources of potential. After all, the late, great Sir John Templeton believed that for the astute and patient investor, times of maximum pessimism could yield great values. We caught up recently with Portfolio Manager Par Rostom of Franklin International Growth Fund to discuss the strategies he’s employing to find value for this mid- to large-cap international growth portfolio.
Beyond Bulls & Bears: The mandate of Franklin International Growth Fund requires you to focus on non-US, mid- to large-cap companies with long-term growth potential. What kind of growth potential are you seeing in that segment of the market today?
Par Rostom: We are seeing some pretty good potential because we invest in companies earlier in their life-cycle of growth. These companies have focused business models with generally one or two business lines. The portfolio reflects a barbell approach of investing in higher and medium growth companies. The higher-growth companies on one end of the barbell may have more volatile growth from year to year, and the medium-growth companies on the other end of the barbell usually have a steadier growth outlook.
Portfolio Manager Lisa Myers is a bit of a whiz kid, having done everything from practicing corporate law in New York to teaching legal writing and research at Georgetown University Law Center. Today, she manages billions of dollars in funds such as the Templeton Global Balanced Fund.
Beyond Bulls & Bears had the rare pleasure of an in-person chat with Lisa recently and got to learn a bit more about who she is beyond the desk.
Beyond Bulls & Bears: Lisa, your background is really quite varied and even includes a law degree. We’re just curious – how is it you first came to be interested in investing?