Franklin Templeton taps into liquid alts demand with two new UCITS launches

Jonathan Malawer, K2 Advisors

Franklin Templeton is growing its liquid alternative fund range with the launch of two new strategies – the Franklin K2 Cat Bond UCITS Fund and Franklin K2 Athena Risk Premia UCITS Fund – to capitalise on “growing demand” for liquid UCITs structures.

The Franklin K2 Cat Bond fund will trade a portfolio of natural catastrophe bonds with a view to generating attractive risk-adjusted returns and compelling current income with limited correlation to other asset classes.

The fund is managed by Jonathan Malawer (pictured), K2 Advisors’ New York-based managing director, head of insurance-linked securities, commodities and environmental Strategies. Malawer, who joined K2 Advisors in 2007, is responsible for the evaluation and selection of hedge fund managers in these strategies.

Meanwhile, the Franklin K2 Athena Risk Premia fund will target long-term capital appreciation with lower volatility compared to broader equity markets. The strategy is aiming for “substantially less correlation” to traditional asset classes over a full market cycle by trading a range of risk premia strategies.

The Athena Risk Premia strategy is managed by Paul Fraynt, head of alternative risk premia in New York. Fraynt joined K2 Advisors in 2017, and has almost two decades of buy- and sell-side experience specialising in alternative investments, including systematic risk premia strategies research, portfolio construction, asset allocation and risk management.

The launches bring the number of liquid alts strategies within the Luxembourg-domiciled Franklin Templeton Alternatives Funds range to eight.

After the launch, both funds will be registered in 11 European countries, including Germany, France, Italy and the UK.

Bill Santos, senior managing director, K2 Advisors, said: “Since the launch of our flagship fund in 2013, we have experienced growing demand for K2 Advisors’ full suite of investment research and management capabilities, along with risk and performance analytics services, in a transparent and liquid UCITS structure.”

Julian Ide, Franklin Templeton’s head of EMEA distribution, described the launch of the Franklin K2 Cat Bond and Franklin K2 Athena Risk Premia funds as “another milestone” in its expansion of its UCITS range of liquid hedge strategies and alternative investment capabilities.

“As one of the biggest providers of alternative solutions globally with USD131 billion in AUM, our goal is to provide a choice of differentiated strategies within our cost-effective product range of liquid alternative solutions to European clients,” Ide said.

“These new funds may be attractive for investors seeking to reduce volatility and improve portfolio returns, especially in today’s uncertain environment.”

The two new funds follow the launch of the Franklin K2 Emso Emerging Markets UCITS Fund in December 2020. Initially launched in October 2019, the FTAF range offers European investors access to a range of liquid alternative strategies in a UCITS format with daily liquidity and transparency.

K2 Advisors, the hedge fund investing unit of Franklin Templeton, provides integrated hedge fund and alternative product solutions covering multiple strategies to institutional and high net worth investors as well as liquid alternative fund offerings for retail investors worldwide, with over USD12 billion in assets under management.