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Fund Rationale: Templeton Shariah Global Equity Fund

Templeton Shariah Global Equity Fund
SGD Retail Class A Accumulation Shares (ISIN: LU0889566641)
SGD Retail Class AS Accumulation Shares (ISIN: LU1267930813)

Fund Manager Page

Introductory information
The Templeton Shariah Global Equity Fund (the "Fund") aims to achieve long-term capital growth by investing primarily in a globally diversified portfolio of Shariah compliant equity and equity-related securities, up to 25% of its net assets in Shariah-compliant debt securities, and up to 10% in China A-Shares and in China B-Shares.

In choosing equity and equity-related investments, the Investment Manager focuses on the market price of a company’s securities relative to its evaluation of the company’s long-term earnings, asset value and cash flow potential, as well as on other measures that the Investment Manager deems appropriate to determine a company’s value.

The Fund is benchmarked against the MSCI AC World Islamic Index, and is suitable for investors who seek capital appreciation by investing in undervalued securities in a well-diversified global equity fund, seek investment in Shariah-compliant securities, and plan to hold their investment for the medium to long term. 

The inception date of the oldest share class of the Fund is 10 September 2012. The SGD Class A Accumulation shares were incepted on 25 March 2013, and SGD Class AS Accumulation shares were incepted on 19 October 2015. As of July 2020, the Fund managed a total asset of USD 71m.

 

Characteristics
The Fund invests primarily in Shariah-compliant equity securities of companies of any nation, including Emerging Markets. It may also invest up to 25% of its net assets, in Shariah-compliant debt securities of governments and companies located anywhere in the world or short term instruments; these include Sukuk, any other shariah-compliant debt securities and Murabaha placements.  The Fund may invest up to 10% of its net assets in China  A-Shares (through Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect) and in China B-Shares.

As of Aug 2020, the Fund holds 96.93% in equity and the remainder in cash and cash equivalents. It’s top country allocations are the United States (24.15%), Japan (20.35%), Germany (10.76%), China (8.66%) and South Korea (7.47%). In terms of sector allocation, it’s largest allocations are in Information Technology (22.7%), Health Care (21.38%), Materials (14.19%), Consumer Discretionary (10.77%) and Industrials (8.84%). The fund has a price to earnings ratio (12-mo trailing) of 19.43x and a dividend yield 2.92%.

 

Background information and cost
The fund has an underlying fund management fee of 140bps per annum (1.40% p.a.) and total expense ratio (“TER”) of 174bps per annum (1.74% p.a.). Endowus have arranged for the Fund Management Company to rebate the trailer fees which Endowus will refund 100% back to the client to achieve a lower net management fee of 100bps (1.00% p.a.) and net TER of 134bps (1.34% p.a.). Endowus do not charge a preliminary sales charge or any other  fees, other than the all-in advice fee. The fund is on the CPF Investment Scheme - List A Fund, and is included under the CPF Investment Scheme for Ordinary Account. It has been classified by the CPF Board under the risk classification of “Higher Risk / Broadly Diversified.”

The Fund is managed by Franklin Templeton. Founded in 1947, they bring together specialist investment managers with distinct styles to offer clients a full range of capabilities, from traditional to alternative investments. As of June 2020, Franklin Templeton manage a total of USD 1.4tn assets.

 

Selection criteria for Endowus
Endowus have selected the Templeton Shariah Global Equity Fund as it is the only Shariah-compliant global equity fund available for Singapore-based retail investors, and it is approved for CPF investing. It is an Luxembourg domiciled UCITS fund which is more tax efficient and it is denominated in Singapore dollars to make it an FX efficient portfolio for Singapore based investors matching your assets with your future liabilities and thereby removing unnecessary FX risk and cost.

Updated by Endowus: 26 Oct 2020

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.