Templeton Global Bond

Observant1

The September 2021 Morningstar Fund Investor newsletter indicates that Templeton Global Bond (TPINX) was downgraded from Silver to Neutral.

"This fund has stuck to Its guns, and that means it has
been wrong for a long time. Manager Michael
Hasenstab has been bullish on emerging markets and
bearish on U.S. bonds. The fund kept duration near
zero while maintaining outsize bets on Ukraine and
other emerging markets. We stayed positive on the
fund given Hasenstab’s past record, but eventually we
have to conclude that he’s not as good as we thought."

TPINX was one of the premier funds in the World Bond category years ago.
Templeton Global Bond was different from most World Bond funds due to substantial emerging markets exposure and its currency bets. As of 01/31/16, the fund generated top 1% / top 2% category returns for the respective 10 Yr and 15 Yr trailing periods.
Michael Hasenstab (M* 2010 Fixed-Income Manager of the Year) started co-managing TPINX on 12/31/2001.
Several fund managers have come and gone since then.
Templeton Global Bond was moved to the Nontraditional Bond category in 2019.

I remember purchasing Templeton Global Income (GIM - CEF version of TPINX) in late 2013.
GIM was trading with an attractive discount and it had a lower expense ratio than TPINX.
Unfortunately, the discount widened and Mr. Hasenstab lost his mojo.
I sold the CEF approximately five years later booking a small profit.

carew388

Yes-I invested in TPINX TGTRX and TBOAX years ago. I sold like you did. I liked the funds and never found a really good substitute!

rforno

Same here - I had TGBAX and GIM off and on over the years but not held any of them in quite a long time. Just goes to show that even darling fund managers aren't forever regardless of who likes them .... which is a reality of life totally lost on the SA editorial team as it continues fawning over Cathie Wood at ARK, I might add.

Sven

I used to invested with Mr. Hasenstab but the fund has been lagging the global bond category consistently for a long time. Many oversea bonds pay very little in dividends. Some are in negative yield as a result of QE !

rforno

Sven said:

I used to invested with Mr. Hasenstab but the fund has been lagging the global bond category consistently for a long time. Many oversea bonds pay very little in dividends. Some are in negative yield as a result of QE !

If memory serves, I felt he was going the direction of Arnott in terms of dogmatically holding onto positions despite changing conditions....

Sven

For sure Hasenstab is stubborn and stays in the wrong sectors for too long. Even today his funds are so so only. Surprise to see people still invest with him.

Observant1

Several emerging market and currency bets went wrong over the years.
Maintaining a low overall duration also didn't help.
As was mentioned, Mr. Hasenstab could be stubborn in holding losing positions for too long.

Sven

Templeton Global bond and Total Return funds were popular on this board. Not anymore as they continue to lag badly in the global bond category.

Derf

Would TGINX fall inline with those funds mentioned above ?
Thanks, Derf

Sven

@Derf, I don’t have good track record on EM bond funds. Last ones I held were PImco from 2008 and their funds took over several years to recover. To compound the mistake, I bought too much at once instead building the position over 3-6 months.

carew388

TGINX is a middle of the pack EM Hard Currency bond fund. AEDVX has better returns with a lower SD. If you have a Fidelity account FNMIX is available with fewer trading restrictions.

hank

As an early investor in the Templeton Funds (1970s) under Sir John it hurts a little to see the name in use by much larger (and publicly traded) Franklin. The original Templeton complex was a class act. I never thought as highly of Franklin which acquired Templeton in 1992.

International bonds are a tough act. So many different economies moving in different directions at any given time can make the smartest manager appear to be an idiot over shorter periods. And rates world wide are abysmal anyway. Think it’s tough earning a decent return in the U.S.? Ain’t any better across the globe unless you want to take on significant credit risk. Neither Russia nor Brazil strikes me as an especially “safe” (sleep well) spot to park my cash, although I’m sure either Putin or
Bolsonaro would be glad to have it.

Observant1

Frankly, I don't see a need for developed market bonds.
They yield less than U.S. bonds and corresponding funds usually have higher expense ratios.
What's the point?
Investors who are not seeking bonds for "ballast" and are comfortable with heightened volatility, may consider EM bonds for a part of their portfolios.
VEMBX has only been around since 03/10/2016 but it has performed well since inception*.


*This is not a recommendation. Perform your own due diligence.

Sven

Vanguard International total bond index fund, VTABX, is often part of Vanguard 's target date funds. Low volatility but also low yield.

I agree EM debt is perhaps a better option for income investor. So what is so unique of VEMBX? This is a EM local currency fund and this category has not done well in recent years.

Observant1

I wouldn't necessarily describe VEMBX as being unique.
However, the fund generated higher returns (5 Yr - Top 2%) with lower volatilty than its EM Bond fund peers.
Nobody knows if VEMBX will continue to outperform in the future.
I don't own this fund, but would put it on my list if I was considering EM bond funds.

Edmond

Doesn't Hassenstab "work" from the Bahamas? Maybe he is just not too focused on work.

Sven

The work location should not affect your work providing that the fund managers have all the tools and access to the analysts. For example, the former Harbor International fund manager, Hakan Castgren lived in Bahamas and he ran the fund just fine before his passing. So did Mark Mobius of Templeton Emerging Market fund. I believe Hassenstab lost sight of the investment and made poor decision. I left after reviewing the holdings for several quarters.

Observant1

Mr. Hasenstab works from San Mateo, California.

Sven

Thank you for clarifying the matter.

BenWP

I recall Hakan Castgren being based in Bermuda, but I have been wrong before.

Sven

Yes he was. He was a different type of manager. His successor team never to replicate his investment process and they were replaced by other advisor at Harbor funds.

carew388

I sold Hasenstab's fund after I saw a sizable allocation to Ukranian bonds !

msf

A little(?) late to this party, but M* finally downgraded the fund from silver to neutral:

This fund has stuck to its guns, and that means it has been wrong for a long time. Manager Michael Hasenstab has been bullish on emerging markets and bearish on U.S. bonds. The fund kept duration near zero while maintaining outsize bets on Ukraine and other emerging markets. We stayed positive on the fund given Hasenstab's past record, but eventually we have to conclude that he's not as good as we thought.

https://www.morningstar.com/articles/1058687/the-5-biggest-downgrades-of-2021

BaluBalu

In investment, increasingly, speed is Alpha and it seems M* has not reevaluated its reaction function in the past 10 yrs I have come to know M*, making M* Analyst commentaries less meaningful for an active (fund) investor.