- Franklin Templeton
fund manager Michael Hasenstab has been betting on rising Treasury yields since 2017. In that same time period, Treasury yields have fallen to their lowest levels ever. - After being on the wrong side of the trade for years, Hasenstab has finally thrown in the towel and exited the trade, Bloomberg reported.
- The flagship fixed-income fund that Hasenstab manages has seen its assets under management nearly cut in half, falling from $40 billion in 2017 to $22 billion today, according to Bloomberg.
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Fund manager Michael Hasenstab, who manages Franklin Templeton's flagship fixed-income
Hasenstab was betting that Treasury yields would rise, and initiated the short position back in 2017. Since then, Treasury yields have fallen to historic lows as the Fed launched a number of monetary stimulus policies to combat the economic damage inflicted by the coronavirus pandemic.
A look at the Templeton Global Bond Fund fact sheet shows average duration, which measures the sensitivity of a fixed-income portfolio's price to changes in interest rates, turned positive to 2.06 years as of March 31. This is a dramatic change from the average duration reported as of December 31, 2019, of negative 1.01 years.
Additionally, Bloomberg reported that the fund has tactically unwound its short position, citing a person familiar with the situation.
Assets under management in the mutual fund that is often utilized by financial advisers fell $4.4 billion over the past three months to $22.55 billion today. Since the start of Hasenstab's short Treasurys bet in 2017, assets in the fund have fallen by $18 billion. The fund had nearly $70 billion in assets in 2015.
Performance for the adviser share class of the fund has suffered over the past five years, returning just 0.49% relative to its benchmark return of 2.96% as of March 31. Meanwhile, 10-year performance for the fund has outperformed its benchmark by 40 basis points.
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