Franklin Templeton Investments launches Franklin MENA Fund
16th June 2008. Franklin Templeton Investments is pleased to announce the launch of FTIF Franklin MENA Fund, a subfund of Franklin Templeton Investment Funds (FTIF, a Luxembourg-registered SICAV). The fund is managed by Franklin Advisers, Inc. (part of the Franklin Templeton Investments group), based in San Mateo (California), with the Dubai-based asset manager Algebra Capital acting as sub-advisor. Franklin Templeton Investments acquired a 25% stake in Algebra Capital in August 2007.
The fund aims to achieve long-term capital appreciation through investing in securities across the entire market capitalization range in markets in the Middle East and North Africa (MENA). The MENA region includes, but is not limited to Kingdom of Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain, Oman, Egypt, Jordan and Morocco. To achieve this aim, the fund will invest in stocks capable of outperforming the market through economic cycles.
MENA, whose economies grew substantially in the past years, is the eighth-largest economic region in the world, according to the International Monetary Fund. While high energy prices have undoubtedly boosted growth in many countries in the region, there is also a strong demand for consumer and financial products and the region’s young population is expected to drive demand for the real estate sector.
Stock markets in the MENA region have been opening up and introducing better systems and processes, resulting in increasing interest, both from local and global investors. As public markets have grown, so has the variety of sectors represented. Market capitalization is low, leaving room for much potential growth. Valuations tend to be attractive due to strong corporate earnings In addition, MENA markets seem to show little or no correlation with markets in the rest of the world. Correlation between markets in the region itself is also low. Transparency has also been improving.
“This is an opportune time to consider the MENA region as a portfolio diversifier. The MENA region represents one of the great frontier market investment opportunities, offering the potential for long-term growth and low correlations with other markets. There is diversification from oil revenues and the expansion of other sectors is increasing substantially,” said Ziad Makkawi, CEO of Algebra Capital. “Franklin Templeton Investments and Algebra Capital have had successful fund launches together in less than one year of partnership. We look forward to bringing this innovative and dynamic relationship into our present and future business dealings,” added Makkawi.
Stephen Dover, CFA, has been appointed portfolio manager for FTIF Franklin MENA Fund. Mr. Dover is also managing director and international chief investment officer for Franklin’s local asset management groups. “Compared with standards in other emerging markets, published disclosure by public companies in the region is relatively good and is getting better. However, company managements are not easily approachable by investors unless an experienced local presence is available,” said Mr. Dover. “That is why we are happy to have Algebra Capital on board as sub-advisors as they have local, on-the-ground knowledge with close connections to company managements in the region.”
“We believe our 60 years of experience in global asset management and the local presence provided by sub-advisors Algebra Capital makes the Franklin MENA Fund a suitable choice for investors to seek value out of these potential new markets”, said Harshendu Bindal, Senior Director – Central Eastern Europe, Middle East & Africa, Franklin Templeton Investments.
Franklin Templeton Investments has a long history of managing emerging market funds. It opened an office in the United Arab Emirates in 2000, providing sales and marketing support for their distributors in the region.
