Templeton Expands Franklin Line

Back in February we added the high-performance Franklin U.S. Small Cap Growth Fund to the Mutual Funds Update Recommended List.

At the time, we noted that it was the only fund bearing the Franklin name that was offered by Templeton Canada (Franklin is a well-established U.S. fund company that merged with the Templeton organization a few years ago).

Well, that’s no longer the case. In late March, Templeton announced the launch of seven new entries bearing the Franklin name, effectively creating a new fund family for Canadian investors.

The name difference is important. Whereas Templeton is famous for its deep-value management style, Franklin is a multi-style manager, running several growth funds as well as some value funds. So if you are considering any of these new entries, understand that they do not employ the classic Templeton approach, even though they are distributed through that organization.

One of the new funds is an RRSP-eligible clone of the U.S. Small Cap Growth Fund. There’s also a U.S. money fund, the first to be offered by the Templeton in Canada. Of the other five new funds, three focus on specific sectors of the economy and two offer differentnvesting approaches to the U.S. market. Here’s a quick run-down of the new offerings:

Franklin U.S. Large Cap Fund. It may come as a surprise but until now Templeton Canada has not had a single dedicated U.S. fund other than the Franklin small cap entry we’ve recommended. The backbone of the operation has been its international funds (Templeton Growth, Templeton International Stock, etc.), with some generally mediocre domestic entries for RRSP business. Now all this is changing, due in large part to demand from clients and financial advisors who wanted a wider range of choice says Don Reed, president and CEO of Templeton Management Ltd. This particular fund is a replica of the Franklin Large Cap Growth Fund, which is offered in the States. Both have the same manager, Michael McCarthy, and the portfolios will be very similar with a focus on blue-chip companies, with no special emphasis on either old or new economy stocks. The American fund was started in June 1999 and it posted a return of 60.5% over the period from inception to the end of March.

Franklin U.S. Aggressive Growth Fund. As the name implies, this will be a more aggressively managed entry, with stocks from all capitalization groups, small, medium and large. It will replicate a fund that already exists in the States, the Franklin Aggressive Growth Fund, and will have the same manager in Terri Spath. That fund was launched on June 23, 1999 and to March 31 showed a return of 202.8% since inception.

Franklin Technology Fund. This will be a clone of a similar fund that was due to be launched in the U.S. on May 1. Although the mandate will allow the manager to invest world-wide, it is expected most of the holdings will be U.S. stocks.

Franklin World Health Sciences & Biotech Fund. This will be the newest Canadian entry into the hot biotech sector. However, Franklin is hedging its bets here. In the States, manager Kurt von Emster runs a pure biotech fund, with all the volatility, and profit potential, that involves (it gained 178.5% for the year to March 31). The new Canadian fund has a broader mandate, which should reduce the risk to some degree.

Franklin World Telecom Fund. As the name suggests, this will be a global telecommunications fund. Manager is Alex Peters, who runs the Franklin Global Communications Fund in the States, which was just nominated by Smartmoney as the top telecommunications fund in that country. It showed a gain of 60.1% for the year ending March 31.

All the new funds are currently going through the process of obtaining clearance from securities regulators. They’re expected to be available to investors in June.

Mutual Funds Update is published monthly and is available by subscription through this Web site or by visiting Gordon Pape’s Building Wealth site at www.gordonpape.com