Franklin Templeton loses $5.5bn amid Ukraine turmoil
Investors have pulled $5.5bn from the funds of Michael Hasenstab, the star fixed income manager at Franklin Templeton, amid political turmoil in Ukraine.
Mr Hasenstab, who has gained fame for his aggressive bets on recoveries in the Irish and Hungarian debt markets, reportedly holds more than a third of Ukraine’s international dollar bonds.
With Ukrainian bond prices having fallen sharply on fears that Russia’s annexation of Crimea could lead to a wider conflict, investors have withdrawn $3.6bn from the Templeton Global Bond fund so far this year, according to figures from Morningstar, the data provider. The fund held $4.3bn of Ukrainian government bonds at the end of December. Around $1.9bn has also been pulled from Templeton’s Global Total Return fund, the best-selling mutual fund in Europe last year, which held just over $1bn of Ukrainian sovereign debt at the end of December.
However, the International Monetary Fund, which last week led a $27bn international support package for Ukraine, has said it does not envisage the country’s debt will have to be restructured at this point.
Franklin Templeton declined to comment, apart from saying that its global bond group, which manages $190bn of assets, often takes a contrarian approach.
Régis Chatellier, senior emerging markets credit strategist at Société Générale, said: “To the extent that no debt reprofiling is envisaged, the downside on Ukrainian bonds may be limited.”
Mr Chatellier added that Ukrainian bonds looked “well positioned” to outperform other emerging markets’ debt.