Update on Templeton International Stock Trust and Global Stock Trust
Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the fund listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).
Over the last several years, Templeton Global Stock Trust (“Templeton Global”) and Templeton International Stock Trust (“Templeton International”) have experienced:
- changes to senior leadership and the structure of the equity teams,
- significant client losses and reductions in assets under management, and
- poor long-term performance.
These developments raise concerns about the stability and the long-term viability of these strategies.
GRS Investment Solutions comments
We met with Templeton in 2019 to review the structural and leadership changes at the firm and to discuss our concerns about the strategies. The meeting did not alleviate our main concerns.
The most recent market cycle with significant and extended underperformance of value relative to growth style has been a challenge, but at the meeting, Templeton could not articulate the catalysts that they would expect to trigger a return to their ability to add value through security selection.
We were also concerned with significant changes in the number of holdings in the strategies, which recently decreased from 110-120 names to 60-70 names. This higher conviction approach increases the importance of each stock decision. Moreover, the change suggests an investment process that may be in flux.
Despite a period of generally rising global equity markets in 2019, assets under management in both strategies have declined significantly, and client losses appear to be gaining steam rather than abating.
We have lost long-term confidence in these two Templeton strategies. We have designated both strategies as Suggested For Removal. Plan sponsors who currently offer either of these funds are encouraged to review them and consider removing or replacing them with a fund currently in their line-up or an alternative on the Core investment platform. Sun Life’s governance activities on the funds will continue for the time being. We expect we will discontinue governance activities at a future date.
Please contact your Sun Life Group Retirement Services representative.