Franklin Templeton thoughts: Investing in infrastructure – Why now?

Infrastructure has recently seen increased attention as broad equities have been weaker in 2022 due to inflation, rising interest rates, global supply chain disruptions from COVID-19 and the war in Ukraine. Shane Hurst, Portfolio Manager with ClearBridge Investments, discusses the opportunities and potential income benefits for investors in the space today.

With equities weaker in 2022 and trading on fast-moving events, such as the Federal Reserve’s aggressive rate hikes and the war in Ukraine, infrastructure’s long-term proposition has been looking more attractive to investors today. This is because infrastructure returns are driven by investment plans in essential services, which span 10 or more years into the future, and these returns accelerate over time while providing considerable predictability compared to equities.

The relative predictability of infrastructure returns is delivered by regulated and contracted assets, which are our focus as we build infrastructure portfolios. With regulated assets such as water, electricity and gas transmission and distribution, a regulator determines the revenues a company should earn on its assets. Because demand for these assets is steady, and the regulator determines revenue, this mechanism leads to a relatively stable cash flow profile over time. Additionally, regulated assets are often monopolies, are typically defensive, and generate high amounts of income.

We also focus on on user-pay assets, which include airports, ports, rail, toll roads and communication infrastructure. These are long-term concession contracts leveraged to the growth in the underlying economy, which means they are tied to the volume of people and cargo flying, moving through ports and along railways, or using cellular towers.

Infrastructure’s inflation hedge

We believe two key features of infrastructure should interest investors right now. The first feature is its ability to act as an inflation hedge in investment portfolios. Inflation has been running hot globally as the COVID-19 crisis waned and demand for goods and services returned, while supply chains struggled to meet demand. The war in Ukraine gave inflation a further jolt: Europe consumes about 45% of Russian gas, and as Europe and other parts of the world try to wean their way off Russian gas, effectively lowering supply and creating demand, this transition has resulted in an increase in commodity prices.

Commodity inflation has had little impact so far on regulated assets, and infrastructure is typically able to adjust to inflationary environments due to the largely pre-programmed way it builds inflation into regulation and contracts. This applies to both regulated utilities, which regularly reset their allowed returns with regulators to account for inflationary cost increases, and user-pay assets, such as toll roads or rail, as both types of infrastructure generate inflation-linked revenues.

Infrastructure’s pricing power comes from the essential nature of its assets: even at times of economic weakness, consumers continue to use water, electricity and gas, drive cars on toll roads, and use other essential infrastructure services. Just as importantly, the income we look for from infrastructure is underpinned by long-term contracts, which ensure a steady flow of revenue over a long period of time.

The move toward net zero

The second key feature driving interest in infrastructure is its central role in the trend toward decarbonization of the global economy. In our view, decarbonization, or the move toward net-zero carbon emissions, provides strong investment tailwinds for infrastructure. Infrastructure and utilities are at the forefront of this effort and can offer investors a stable return on equity without additional technology risk. Annual power sector capital spending is expected to increase from US$760 billion in 2019 to US$2.5 trillion (in 2019 dollars) by 2030,1 with approximately half spent on solar, wind and other renewable energy generation and a third spent on modernizing and extending electricity networks.

In an environment where coal plants are being retired or are used far less, and where gas will be used as a transition fuel, more spending must occur in renewables to meet global power demand. In our estimation, spending on wind and solar energy infrastructure needs to accelerate by at least 10 times from current levels, and this capital is expected to flow through to regulated utilities building out these resources.

Electric vehicles are also gaining more widespread consumer acceptance and adoption. By some estimates, around 20% of vehicles sold annually today are electric, and by 2030, that figure is expected to increase to 60%, although figures differ from country to country. Particularly with today’s high fuel prices top of mind for consumers, electric vehicle sales seem likely to continue accelerating.

Global decarbonization may impact other consumer transportation changes. Rising fuel prices and carbon emissions may also affect air travel in the future. For example, airlines could be taxed if flights are too short, making rail and public transit more appealing to some consumers.

And while energy infrastructure pipelines have seen renewed interest as energy security has become a strategic priority (in Europe, for example), midstream pipelines are also beginning to facilitate an energy transition through hydrogen or carbon capture and storage, which are developing technologies that will only have an increasing role in net-zero efforts.

So, there are several areas of infrastructure benefiting from decarbonization tailwinds, not to mention other secular trends like 5G driving investment in communication towers. With infrastructure’s ability to largely pass-through inflation, as well as provide current income, its attractiveness to investors now is no surprise.

There are several ways to invest in infrastructure, and our preference is to focus on a diversified group of large, liquid, and high-quality infrastructure companies around the world. We look for companies with strong, predictable cash flows. We are uninterested in illiquid assets or companies with volatile cash flows, including competitive assets and businesses, which tend to be unregulated and carry commodity price risk. We also see private infrastructure capital continuing to come to listed markets as they seek attractively priced assets for acquisition.

Currently, with more than US$300 billion to US$400 billion of dry powder—or capital waiting to be invested—unlisted players will benefit the companies in the listed infrastructure universe. These companies sell assets, often non-core or minority interests, for prices in excess of where they are trading. On average, we have seen these sales done at roughly a 30% premium to where they are currently trading or their implicit value within these companies.

In summary, we believe the opportunity set for infrastructure investors is only set to grow and will benefit from a number of powerful drivers, including attractive valuations and potential dividends that income-seekers would find appealing.

To that end, our team has a robust stock selection approach, scouring developed and emerging markets for listed and liquid infrastructure opportunities that we believe are well-positioned to benefit from the all-encompassing, generational move toward decarbonization. Focusing on regulated and contracted utilities and user-pay assets, we aim to deliver stable returns with steady and growing cash flows as well as dividends that increase over time in a low-volatile fashion.


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This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data.  Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

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All investments involve risks, including possible loss of principal. Equity securities are subject to price fluctuation and possible loss of principal. Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Investments in infrastructure-related securities involve special risks, such as high interest costs, high leverage and increased susceptibility to adverse economic or regulatory developments affecting the sector. In addition to other factors, securities issued by utility companies have been historically sensitive to interest rate changes. When interest rates fall, utility securities prices tend to rise; when interest rates rise, their prices generally fall.

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This information has been accurately reproduced, as received from Franklin Templeton Investment Management Limited (FTIML). No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

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BlackRock Commentary: Beware behavioral bias in new regime

Emily Haisley, Behavioral Finance with BlackRock Risk & Quantitative Analysis, together with John Boivin, Head, Wei Li, Global Chief Investment Strategist and Beata Harasim, Senior investment strategist, all forming part of the BlackRock Investment Institute, share their insights on global economy, markets and geopolitics. Their views are theirs alone and are not intended to be construed as investment advice.

Key Points

Investing biases: We highlight the top three behavioral biases to avoid in the new, volatile market regime – and give tips on how investors can try to overcome them.

Market backdrop: Stocks rallied and yields fell last week after markets concluded the Fed’s pace of rate hikes will slow. We are less sanguine and see a dovish pivot only later.

Week ahead: We are watching this week’s U.S. jobs report for any signs production capacity is on the mend. The labor shortage is a key production constraint.

Investors are strapped in for a market rollercoaster in a new regime of increased volatility. Views on central bank rates are shuffling fast, as last week’s market reaction to the Fed’s rate hike showed. We think this warrants careful thought about portfolio changes. But change is hard. Behavioral biases subconsciously influence investment decisions. We look at three biases likely to trouble investors, especially in this volatile market – and share tips on how to overcome these pitfalls.

Pain vs. gain

Satisfaction with gains and losses in behavioral finance prospect theory.

The first bias is the disposition effect, or the tendency to hold losing positions too long and sell winning ones too soon. We expect the disposition bias to be most prevalent when investors are feeling stinging losses – like so far this year. Both stocks and bonds have racked up declines not seen since the 1970s this year. Behavioral finance finds that people feel the pain of loss twice as strongly as they experience an equivalent gain as pleasurable (the red versus green arrow in the chart). As a result, people may hold on to losing positions to avoid the pain of a loss (bottom left in chart). Meanwhile, it’s tempting to lock in gains too soon on winning positions because of a reluctance to take more risk for only marginal benefits (top right).

There’s a second bias that should really be public enemy No. 1 today for professional investors: inertia. This is a reluctance to make changes or making ones too small to affect performance. Why is this especially a problem now? The era of steady growth and inflation known as the Great Moderation is over, we believe. A new regime of increased macro volatility is in its place. Yet central banks appear to believe they can magically curb inflation and cause only a mild economic slowdown, as we wrote last week. We see more volatility ahead as markets have rallied on hopes the Fed is about to change course and relax policy. That optimism is misplaced, in our view. All of this calls for professional investors to change their portfolios more quickly. It will be costly, in our view, to just follow playbooks such as “buying the dip“ or make slow and minimal changes.

Endowment is the third kind of bias to guard against in the current market backdrop. Think of it as excessively deliberating over whether you may one day need something that sat collecting dust for years – whereas you clearly should be decluttering. People with this bias overvalue their assets. The longer they own them, the higher the price they demand to give them up. The endowment effect can lead investors to hold on to positions even after an investment strategy has played out. This can hurt performance. Positions often produce more returns earlier in their life spans, we find.

Tips to mitigate these biases

First, do a blank-slate exercise – imagine you have realized all your gains and losses. Then construct the ideal portfolio for the most likely market and macro environment over your time horizon. That doesn’t mean abandoning long-standing investment processes. Instead, consider portfolio changes without basing it on your historical portfolio holdings and performance. Second, think of future market events or performance thresholds that would signal when to take profit or cut losses. Making a plan can help determine how to react amid volatile markets and high emotions. This is the reason we give signposts for changing our views in our 2022 midyear outlook. Third, encourage open conversations about biases and the changes required to overcome them. Discuss your emotions after losses, examine mistakes even when performance is good, and weigh input from colleagues with an alternative point of view.

Our bottom line 

Beware of behavioral biases in investing. We are guarding against their pitfalls because we believe the new regime requires an overhaul of portfolios. We’ve reduced portfolio risk throughout this year. Our latest tactical move: an up-in-quality portfolio shift by downgrading developed market stocks and upgrading investment grade credit. We underweight U.S. Treasuries and overweight inflation-linked bonds, believing markets underestimate the new regime’s inflationary nature

Market backdrop

The Federal Reserve increased the fed funds rate by another 0.75% last week. U.S. stocks rallied as markets concluded the Fed’s pace of rate hikes will slow, while yields fell on news of stalling growth. The Fed still thinks hiking rates will only cause a mild slowdown. It has yet to acknowledge the stark growth-inflation tradeoff: crush growth or live with some inflation. We don’t see a policy pivot until 2023, as data show persistent inflation. Expect more volatility until the Fed changes course.

This week’s U.S. jobs report is front and center. The report will be key as the Fed looks to the labor market for further signs of healing in production capacity. The Bank of England (BoE) is set to increase interest rates again. But we think it is nearing the point where it changes course. To us, the growth cost of further rises will lead the BoE to live with inflation above target.

Week Ahead

August 3: Caixin Services PMI

August 4: Bank of England policy meeting

August 6: U.S. jobs report

August 7: China trade data


BlackRock’s Key risks & Disclaimers:

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of 1st August, 2022 and may change. The information and opinions are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are often heightened for investments in emerging/developing markets or smaller capital markets.

Issued by BlackRock Investment Management (UK) Limited, authorized and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from  BlackRock Investment Management (UK) Limited. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

Notes from the Trading Desk – Franklin Templeton

Franklin Templeton’s Notes from the Trading Desk offers a weekly overview of what our professional traders and analysts are watching in the markets. The European desk is manned by eight professionals based in Edinburgh, Scotland, with an average of 15 years of experience whose job it is to monitor the markets around the world. Their views are theirs alone and are not intended to be construed as investment advice.

The Digest

Last week saw a strong end to the month, which helped many equity indices claw back some of the first half of year (H1) losses and have their best monthly performance for some time. There was a glut of corporate earnings and some better-than-expected results from index heavyweights in the United States helped sentiment. In addition, following the Federal Reserve (Fed) meeting, we saw a scaling back in market expectations for central bank rate hike paths. On the week, the MSCI World Index traded up 3.6%, the STOXX Europe 600 Index was up 3%, the S&P 500 Index was up 4.3% and the MSCI Asia Pacific Index was up 0.4%.

Fed pivot?

Last Wednesday’s Fed meeting was a key focus for investors given the aggressive path higher rates have followed in recent months. The Fed raised rates 75 basis points (bps) to 2.5% as expected, but Chair Jerome Powell’s commentary gave some hope that the rate hikes may not be as aggressive going forward. Notably, Powell said that future large rate hikes are possible but would be dependent on data, and that the Fed was close to the neutral rate range. He also described the 75 bps move as “unusually large” and—to be clear—did say another such hike could be warranted at the next meeting. However, the market is now pricing the year-end federal funds rate at 3.32%, vs. expectations of 3.68% earlier in July.

This change in market sentiment caused US Treasury yields to further tighten. The US 10-year bond declined 10 bps to 2.65%, down from 3.5% in June. Technology and growth stocks continued to recover ground last week amid the drop in yields.

Some question how much of a pivot this really is. Franklin Templeton Fixed Income CIO Sonal Desai was quoted in the Financial Times as saying, “Financial markets heard only what they wanted to hear and ignored the rest. I think the stage is set for a correction and more volatility ahead.”

In addition, over the weekend, Fed Reserve Bank of Minneapolis President Neel Kashkari made some fairly hawkish comments: “We are committed to bringing inflation down and we’re going to do what we need to do… We are a long way away from achieving an economy that is back at 2% inflation, and that’s where we need to get to.”

European gas concerns

Headlines around gas supply continued to be the focus last week for European markets, with Russia reducing Nord Stream 1 gas supply to 20% (from 40%). European gas prices increased 30% over the past five days. The European Union (EU) confirmed a plan for member states to reduce gas consumption by 15%. This is only on a voluntary basis after number of countries pushed back on the original idea, demonstrating the challenges of coordinating energy policy across the block.

Some countries have made progress diversifying away from Russian gas. Italy has reduced its demand for Russian gas from 40% to 25% in recent months as it turns to imports from North Africa.

Germany increased non-Russian liquified natural gas (LNG) imports but remains heavily exposed. Last week a number of German regions took steps to reduce consumption. Measures such as banning hot water in public buildings, closing certain swimming pools, and dimming some street lighting (amongst others) were announced. The International Monetary Fund (IMF) estimated that Germany is at risk of losing 4.8% of economic output if Russia halts gas supplies, and the Bundesbank has suggested the potential damage could total €220 billion (US $225 billion).

Given this backdrop, we have seen some economists lower their outlook for the eurozone.

The week in review

United States

US markets saw a strong end to the month, with the S&P 500 Index up 4.3% and the Nasdaq 100 Index up 4.4%. The S&P 500 gained 9.1% in July—its best month since November 2020—and the NASDAQ 100 gained 13%, its best month Since April 2020.

Lower bond yields helped last week’s Nasdaq strength, along with reassuring earnings reports from Amazon and Apple.

Energy stocks also advanced last week on the back of positive reports from Exxon and Chevron, which posted their highest-ever profits, benefitting from higher commodity prices.

In a risk-on environment, the defencives were left behind last week, with consumer staples and health care lagging a bit, albeit still positive on the week.

Looking to macro data, US second quarter (Q2) gross domestic product (GDP) created a lot debate. The number was worse than expected, with the US economy contracting -0.9% quarter-over-quarter (Q/Q), after contracting 1.6% in the prior quarter. Two quarters of decline is a key feature of a technical recession, but there has been debate over whether the United States is actually in one given other strong fundamentals in the economy. Republicans described the data as confirmation of “Joe Biden’s recession” but the National Bureau of Economic Research has not yet confirmed a recession. US Treasury Secretary Janet Yellen said she would be amazed if this was declared a recession, as the economy isn’t seeing significant job losses.

Europe

European equities also saw strong performance last week, as the STOXX Europe 600 Index gained 3%, and was up 7.6% for the month. Italian equities led the way higher, (with the country’s benchmark index up 5.6%). Far-right leader Giorgia Meloni currently leads in the polls, and she said she would abide by EU budget rules if she were to win. The Italian 10-year bond yield is now below 3% for the first time since May.

German equities lagged as Russia cut gas supply via Nord Stream 1 back down to 20% (having restarted at 40% the prior week).

In terms of macro data, second-quarter GDP data from Europe was a little more positive than expected, helping markets rally into month-end. Eurozone growth came in at 0.7%. Spain, France and Italy all saw better-than-expected GDP data as the tourism season helped boost economic activity. European inflation was a touch higher than expected though; the eurozone Consumer Price Index (CPI) for July rose to 8.9%, vs 8.6% previously.

Worth noting, European equity outflows continued last week, making it 24 weeks of outflows.

Looking back at the month of July, markets clearly saw a strong rebound after a torrid first half. There is much debate around to what extent this move was a “pain trade” higher, as investors were positioned so bearishly at the end of the first half. Into month-end, some of the most-shorted European names got squeezed aggressively, whilst the year-to-date outperformers, such as defence, lagged. This suggests to us that there was a positioning-led squeeze into month-end.

From a European perspective, challenges remain as the European gas crisis remains front and centre going into winter. From a global perspective, the IMF last week noted risks to economic outlook remain “overwhelmingly tilted to the downside” and downgraded 2022 global GDP to 3.2% (down 0.4% from the prior forecast).

Asia

Asian equities were mixed last week, but the MSCI Asia Pacific still managed to close up 0.4% overall.

Equities in China closed down 0.5% last week, with the government reiterating its zero-COVID policy. Geopolitical tensions with Taiwan also weighed on the market. China still views Taiwan as a province of China and unification is a key goal of China’s President Xi.

The technology sector in Asia was weaker towards the end of the week following reports that Jack Ma is to cede control of Ant Group. Alibaba closed the week down 9% on the news.

The week ahead

Monday 1 August

  • Eurozone manufacturing PMI; unemployment rate
  • Germany retail sales
  • US S&P manufacturing Purchasing Managers Index (PMI); construction spending; Institute for Supply Management (ISM) manufacturing
  • South Korea CPI

Tuesday 2 August

  • US JOLTS job openings
  • China Caixin PMI
  • Reserve Bank of Australia meeting (50 bps hike expected)

Wednesday 3 August

  • Eurozone PPI; retail sales
  • US mortgage applications; S&P services and composite PMI; durable goods; factory orders; ISM services

Thursday 4 August

  • Bank of England Meeting (50 bps hike expected)
  • Germany factory orders
  • US trade balance; jobless claims
  • Japan household spending
  • European Central Bank economic bulletin

Friday 5 August

  • Germany Industrial Production (IP)
  • France IP
  • Italian IP
  • US July employment report


Franklin Templeton Key risks & Disclaimers:

What Are the Risks?

All investments involve risks, including the possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested.  Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity.

Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.

Past performance is not an indicator or guarantee of future performance. There is no assurance that any estimate, forecast or projection will be realised.

This article reflects the analysis and opinions of Franklin Templeton’s European Trading Desk as of 2 August 2022, and may vary from the analysis and opinions of other investment teams, platforms, portfolio managers or strategies at Franklin Templeton. Because market and economic conditions are often subject to rapid change, the analysis and opinions provided may change without notice. An assessment of a particular country, market, region, security, investment or strategy is not intended as an investment recommendation, nor does it constitute investment advice. Statements of fact are from sources considered reliable, but no representation or warranty is made as to their completeness or accuracy. This article does not provide a complete analysis of every material fact regarding any country, region, market, industry or security. Nothing in this document may be relied upon as investment advice or an investment recommendation. The companies named herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. Data from third-party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user. Products, services and information may not be available in all jurisdictions and are offered by FT affiliates and/or their distributors as local laws and regulations permit. Please consult your own professional adviser for further information on availability of products and services in your jurisdiction.

Issued by Franklin Templeton Investment Management Limited (FTIML) Registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL. FTIML is authorised and regulated by the Financial Conduct Authority.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from Franklin Templeton Investment Management Limited (FTIML). No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

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