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FYI: Michael Hasenstab’s $50 billion Templeton Global Bond Fund (TPINX) has had a rough go.
The fund has been wrong-footed on emerging-markets for a while, and a reversal in currencies has hurt bets against the euro and yen. Over the past year, Hasenstab’s flagship has lost 5.9%, one of the worst international bond funds tracked by Morningstar. It trailed the Barclays Aggregate Bond Index in 2014, 2015 and again this year. What now? Well, if you want to take risk, then perhaps it’s time to buy.
Comparing TGBAX to Barclays Agg makes no sense to me. We use the Citi World Govt Bond Index as a benchmark, and it stacks up well. Under-performs for 1 and 3 year (mostly because of last 12 months), beats 5 years and wallops 10 years. We have captured gains that have accumulated for the last 10 years in client accounts, but continue to hold the fund. We are not blind to its very recent stumbles, however, and are watching and staying in touch with our Templeton connection. Honestly we like smaller funds better, and there was a tone of hot money that came in since 2010. Some of that has left (moving on to the now-hot sector), which is fine by us.
I agree the Barclays Agg makes no sense as a 'benchmark.'
I've held TGBAX for ... something like 8, 9 years. Love the insanely-tiny duration of its holdings.
TGBAX has gone nowhere for 1 and 3 years, and 5 years returned 1.57% according to M*. It's 10-15 year returns are nice, but am *very* close to culling it down to a foothold in my portfolio based on that performance, its recent 30%-ish distribution cut, my expectations on its future performance, and because it's still sitting on nearly 50% cash ... which is nice for when opportunity arises, but still. (I think MH and SD are okay managers though.)
As someone said on the M* article, at times TGBAX looks more like a currency hedge fund than a global bond fund.
BobC, slight hijack -- any more thoughts on OSTFX? Seems to have struggled of late as well. Function of John's changing role, or holding cash and being out of sync with markets for a couple of years? Most of the Osterweis funds seem to have lagged of late, which one might expect happens from time-time with a true active manager.
Comparing TGBAX to Barclays Agg makes no sense to me. We use the Citi World Govt Bond Index as a benchmark, and it stacks up well. Under-performs for 1 and 3 year (mostly because of last 12 months), beats 5 years and wallops 10 years.
Yup, that's the benchmark used by the fund in the prospectus.
The current (Jan 1, 2016) prospectus shows the benchmark comparisons through the end of 2014 (not 2015), confirming that all of the underperformance came since then:
(as of 12/31/2014) 1 year/5 year/10 year annualized: TGBAX: 1.84% / 6.01% / 7.64% Index: -0.48% / 1.67% / 3.08%
One of our big concerns has been the size of the fund, and the total amount of assets that Hasenstab manages, which at one time got close to $100B. We confirmed that he is compensated on the amount of assets he manages, so there has been no incentive to close the fund to new investors to keep the fund from becoming unmanageable. With the parent company being publicly traded it is also in their best interest to keep the fund open.
I really cannot put my finger on this. We have always though of the fund as more of a large value fund, even though John and his team use a multi-cap approach. Why M* labels it mid-blend is beyond me. It is definitely not mid-blend. The fund was hurt by its Valeant position, but unlike Sequoia, OSTFX dumped its shares quickly. Nevertheless 3rd qtr 2015 really hurt them. And its large cash position this year as the market recovered has been problematic. I don't question the cash holding, since the fund has always been a cautious one. We will see how they fare going forward compared to the large value class.
On the other hand OSTIX is doing fine, pretty much as we would expect. Comparing it to other high-yield funds is wrong, in our opinion. Its duration is quite low and it has really short average maturity. A 5.7% yield with very low risk is darned attractive to us. Carl does a great job, and we have a lot of confidence in his team.
One of the things that rubbed me the wrong way 'on principle' was the way the May 2016 TGBAX dividend cut seems to have been 'announced'. Not that I need the income (I'm 43, still working) but the fact I only learned about an approx 30% reduction was from a big banner at the top of the fund's home page @ Templeton bothered me -- ie, no email'd shareholder notice, no hard-copy letter, nothing. Had I not casually surfed the fund's site last month, I wouldn't have known about it....and since I tend to let bond funds do their thing and reinvest income, it might've been several months -- or even my annual year-end review of everything -- before I noticed the reduction on my statement.
Comments
I've held TGBAX for ... something like 8, 9 years. Love the insanely-tiny duration of its holdings.
TGBAX has gone nowhere for 1 and 3 years, and 5 years returned 1.57% according to M*. It's 10-15 year returns are nice, but am *very* close to culling it down to a foothold in my portfolio based on that performance, its recent 30%-ish distribution cut, my expectations on its future performance, and because it's still sitting on nearly 50% cash ... which is nice for when opportunity arises, but still. (I think MH and SD are okay managers though.)
As someone said on the M* article, at times TGBAX looks more like a currency hedge fund than a global bond fund.
The current (Jan 1, 2016) prospectus shows the benchmark comparisons through the end of 2014 (not 2015), confirming that all of the underperformance came since then:
(as of 12/31/2014) 1 year/5 year/10 year annualized:
TGBAX: 1.84% / 6.01% / 7.64%
Index: -0.48% / 1.67% / 3.08%
On the other hand OSTIX is doing fine, pretty much as we would expect. Comparing it to other high-yield funds is wrong, in our opinion. Its duration is quite low and it has really short average maturity. A 5.7% yield with very low risk is darned attractive to us. Carl does a great job, and we have a lot of confidence in his team.
One of the things that rubbed me the wrong way 'on principle' was the way the May 2016 TGBAX dividend cut seems to have been 'announced'. Not that I need the income (I'm 43, still working) but the fact I only learned about an approx 30% reduction was from a big banner at the top of the fund's home page @ Templeton bothered me -- ie, no email'd shareholder notice, no hard-copy letter, nothing. Had I not casually surfed the fund's site last month, I wouldn't have known about it....and since I tend to let bond funds do their thing and reinvest income, it might've been several months -- or even my annual year-end review of everything -- before I noticed the reduction on my statement.