Sukuk investments are a rapidly growing asset class, providing access to Middle East, North Africa and South Asia economies, which we believe have exhibited strong growth characteristics over the past decade.
Strategy Overview
The strategy aims to maximise total investment returns by investing principally in a portfolio of fixed- and floating-rate Shariah-compliant securities (including non-investment grade securities), including Sukuk, Murabaha and Wakala placements, and other short-term instruments issued by government, government-related and corporate entities located in developed and developing countries.
Sukuk investments exhibit defensive characteristics due to their higher credit quality and structural demand/supply dynamics compared to other asset classes.
Sukuk investments historically offer low correlation to Shariah compliant assets/other asset classes.
Key Features
Experienced in Managing Global Sukuk
With a track record of managing Sukuk portfolios, Franklin Templeton features one of the most experienced investment teams in the Middle East, North Africa and South Asia region. Team members have specialized experience in managing Sukuk, which helps ensure adherence to Islamic investing principles.
Extensive Shariah-Compliant Resources
The team draws on both the extensive resources of Franklin Templeton’s integrated global investment platform and Shariah-compliant resources through the Amanie International Shariah Supervisory Board, an independent group of scholars which approves and monitors the sukuk. This board provides initial approval on investment objectives and strategy as well as ongoing supervisory and monitoring services to ensure continuous adherence to internationally accepted Shariah principles and standards.
Institutional Quality Risk Framework
Our comprehensive risk management framework integrates a variety of risk measures and perspectives whose goal it is to ensure that all risks are recognized and intentional. Our robust, institutional-quality approach ensures that the risks taken by the strategy are consistent with the investment team’s in-depth research and investment outlook.
Our Philosophy
While various factors can cause markets and securities to trade independently of their underlying fundamentals for periods of time, markets have been efficient in the longer-term. We assign significant resources to identify and exploit these inefficiencies. We believe that an actively managed portfolio of lowly-correlated positions, selected on the basis of intensive bottom-up research, combined with quantitative science, and guided by top-down macroeconomic analysis, has the potential to deliver above-benchmark returns over a full market cycle.
Our Investment Process
This is a general depiction of the investment team's methodology and may not reflect the exact investment process for any particular strategy.
The team develops its own research covering nearly the entire universe of corporate, financial, and sovereign Sukuk issuers, and conducts extensive valuation analysis. Analysts conduct in-depth fundamental and technical research on individual countries of corporate issuers and securities. After calculating an internal credit score, the team seeks to identify credits that will perform on an absolute return basis. Once those potential investments are identified, the team optimizes portfolios with appropriate weightings that meet a proposed mandate’s target risk and return profile.
The model portfolio, which typically comprises two-thirds of the final portfolio, is constructed using a bottom-up research process, with weights free from any portfolio or client bias and solely based on our assessment. Portfolio construction then incorporates additional securities guided by diversification, liquidity, currency, duration, and other risk considerations. The portfolio is monitored continuously using both historical and forward-looking risk parameters.
Meet the Team
Franklin Templeton has an established track record in managing Sukuk products. The Global Sukuk team is one of the most experienced investment teams in the region. Each individual on the team has specialized experience in managing Sukuk to ensure adherence to the investment principles of Islamic law.
In addition, the Global Sukuk Team is part of Franklin Templeton Fixed Income, which is comprised of investment professionals globally. The investment team is also supported by Franklin Templeton’s global resources, including global risk, compliance and operational functions. We believe this integrated structure benefits the research, portfolio and risk management for Franklin Global Sukuk portfolios.
Mohieddine Kronfol
Chief Investment Officer, Portfolio Manager
Industry since: 1996
Hardeep Dogra
Portfolio Manager
Industry since: 2004
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WHAT OUR MANAGERS THINK
