Franklin Strategic Real Return Fund
Data updated: 2024-05-23
C000085067 — Franklin Strategic Real Return Fund. Inflation Hedge Allocation · $104.42M AUM. Holdings, fees, performance and SEC filings.
C000085067 Fund Overview
Franklin Strategic Real Return Fund is a US mutual fund managed by Legg Mason Global Asset Management Trust, categorised as Inflation Hedge Allocation. ABC INVEST provides holdings, performance, costs, cashflows, risk data, prospectus documents and SEC filings, sourced from SEC filings.
- Type: US mutual fund
- Manager: Legg Mason Global Asset Management Trust
- Category: Inflation Hedge Allocation
- Assets under management: $104.42M
- 1-year return: 7.1%
- SEC CIK: 0001474103
- SEC series ID: S000027987
- Share class ID: C000085067
C000085067 Investment Objective and Strategy
Franklin Strategic Real Return Fund describes its objective and strategy as follows, from its latest prospectus filed with the SEC by Legg Mason Global Asset Management Trust.
Investment objective
The fund seeks to provide an attractive long-term real return.
Principal investment strategy
Under normal market conditions, the fund, using a tactical asset allocation program, seeks to provide an attractive long-term real return. The fund defines real return as total return reduced by the impact of inflation. In seeking to meet its investment goal, the fund implements a tactical asset allocation program overseen by the funds adviser, QS Investors, LLC (QS Investors). The fund may allocate its assets among five investment sleeves which the adviser believes are generally complementary to each other, with the following target allocations of the funds net assets: Inflation-Linked Debt Securities (40%) Global Equity Securities (20%) Commodity-Linked Securities (20%) Exchange-Traded Funds (ETFs) that invest in Real Estate Investment Trusts (REITs) (10%) Tactical Strategy (10%) Actual allocations may deviate from each target allocation shown above by up to 50% of such target allocation.
The composition and asset allocation of the funds investment portfolio will vary over time, based on QS Investors overall allocation decisions, and may be changed without shareholder approval. Asset allocation decisions are based primarily on QS Investors evaluation of the relative attractiveness of the asset classes in which the fund invests. The fund utilizes a multi-manager approach, whereby each subadviser and the adviser provide day-to-day management for one or more of the investment sleeves. Each subadviser and the adviser use different investment strategies in managing the sleeves, act independently from the others in their management of the investment sleeve for which they are responsible, and use their own methodology for selecting investments. Currently, Western Asset Management Company (Western Asset), Western Asset Management Company Limited in London (WAML) and Western Asset Management Company Ltd.
in Japan (Western Japan) manage the Inflation-Linked Debt Securities Sleeve, and QS Investors manages the Global Equity Securities Sleeve, the Commodity-Linked Securities Sleeve, the REITs Sleeve and the Tactical Strategy Sleeve. QS Investors may also allocate a portion of the funds assets to ClearBridge Investments, LLC, either in place of, or in addition to, the subadvisers named above. Under normal market conditions, the Inflation-Linked Debt Securities Sleeve invests at least 80% of its net assets in inflation-indexed fixed income securities and at least 70% of its net assets in U.S. Treasury Inflation-Protected Securities (TIPS). The sleeve may also invest in foreign and domestic bonds, debentures and notes and high yield securities. Although the sleeve is expected to maintain a dollar-weighted average credit quality of at least A or equivalent, it may invest up to 10% of its net assets in securities rated below investment grade (commonly known as junk bonds).
Investment grade securities are securities rated at the time of purchase by a nationally recognized statistical ratings organization (NRSRO) within one of the top four categories, or, if unrated, determined by the applicable subadviser to be of comparable credit quality. Although the sleeve may invest in fixed income securities of any maturity, the target average effective duration of the sleeve is expected to range within 3 years of the Bloomberg Barclays U.S. Government Inflation-linked Bond (U.S. TIPS) Index. Based on the securities that make up the U.S. TIPS Index, the range within which the average effective duration of the sleeve is currently expected to fluctuate is 6-12 years, although this may vary. The sleeve may also buy or sell protection in connection with credit default swaps relating to corporate debt securities.
The notional amount of the credit default swaps will not exceed 20% of the sleeves net assets at the time of investment. The sleeves portfolio managers employ an active process that is both top-down and bottom-up. The portfolio managers believe that unique value opportunities can be identified through in-depth and disciplined issue, issuer and sub-sector selection. Duration management, yield curve positioning and sector exposure driven by long-term perceptions of economic behavior and relative valuations are integral to the portfolio managers investment process. Under normal market conditions, the Global Equity Securities Sleeve invests primarily in the common stock of domestic and foreign issuers, particularly issuers that have historically shown higher than average correlations to the components (core and food/energy) of the U.S.
Consumer Price Index (CPI). The sleeve may invest in both U.S. and non-U.S. issuers, and may invest up to 20% of its net assets in securities of issuers located in emerging markets. The sleeve may invest in securities of companies of any market capitalization, including large-, mid- and small-capitalization companies. The sleeve usually invests in securities listed on securities exchanges, although it may invest up to 10% of its net assets in securities that are not registered for sale to the general public. The sleeve may invest directly in foreign securities or may invest in depositary receipts for securities of foreign issuers. The sleeve may, but is not required to, enter into forward currency transactions to buy or sell currencies at a future date. The sleeve may enter into these forward currency contracts only to settle transactions in securities quoted in foreign currencies and for hedging purposes.
The sleeve may invest in exchange-traded funds (ETFs) and other investment companies to pursue its strategies. The sleeves portfolio managers use a blend of quantitative and fundamental investment techniques to select investments. Under normal market conditions, the Commodity-Linked Securities Sleeve invests primarily in a combination of commodity-linked instruments that provide exposure to the investment returns of the commodities markets, without investing directly in physical commodities. These instruments include master limited partnerships (MLPs), structured notes, bonds, debentures and derivatives, including swaps, forwards, futures and options. The sleeve may invest in these instruments through a wholly-owned subsidiary managed by QS Investors, other investment companies, ETFs and exchange-traded notes (ETNs) and may invest in cash, cash equivalents, money market funds or other similar instruments.
Commodities are assets that have tangible properties, such as oil, metals and agricultural products. The sleeves portfolio managers use fundamental investment techniques to select investments. Under normal market conditions, the REITs Sleeve attempts to obtain exposure to the investment returns of the real estate markets by investing primarily in ETFs that hold U.S. and non-U.S. equity securities issued by REITs. Under normal market conditions, the Tactical Strategy Sleeve attempts to diversify the funds risk exposure by investing in asset classes that QS Investors believes will deliver returns that are not highly correlated with those of the funds other asset classes. To achieve this goal, the sleeve uses a variety of quantitative asset allocation and investment techniques. Determination of asset class exposure and selection of investment techniques depends on QS Investors analysis of economic trends and QS Investors predictions as to how various instruments and markets will correlate to one another and to economic developments.
The sleeve may invest in investment companies, including ETFs, that hold domestic and foreign (including emerging markets) equity and fixed income securities, cash, cash equivalents and/or Treasury bonds. The fund may invest in short ETFs that seek a return similar to the inverse, or a multiple of the inverse, of a reference index. Certain investment companies and/or ETFs that the fund may invest in are benchmarked to indices that use a futures-based momentum methodology in an attempt to track prices of commodity and financial futures contracts. Investment companies using this methodology typically short the market when quantitative models anticipate declining prices. The sleeve may invest in futures to gain exposure to equity and fixed income markets and may invest in equity and equity volatility options to attempt to mitigate the effects of large unexpected declines in equity and other capital markets.
The sleeve may also invest in certain currency derivatives in connection with the funds target net exposure to non-U.S. Dollar currencies. Under normal market conditions, the fund expects to target a 50% net exposure to the U.S. Dollar (USD). Each subadviser manages its sleeves currency exposure independently of the funds overall USD exposure target. QS Investors will monitor and calculate the funds currency exposure daily. For purposes of this calculation, currency exposure will be determined by the local currency of a securitys issuer. To maintain the funds target currency exposure, QS Investors will purchase (as needed) currency instruments such as currency swaps and forward currency contracts using assets from the Tactical Strategy Sleeve. QS Investors will purchase currency instruments based on its analysis of which foreign currencies it believes may provide the most effective hedges against future increases in U.S.
inflation. At times, the fund may deviate either up or down from its target currency allocation due to market conditions. In addition, the fund at times may be both long and short foreign currencies in its non-USD allocation. The fund will not necessarily hedge its foreign currency exposure. The fund may borrow money, including for investment and cash management purposes, in amounts up to 33-1/3% of the funds total assets, including borrowings, a practice known as leveraging. In addition, the fund may engage in transactions that have a leveraging effect on the fund, including investments in derivatives such as futures and options for hedging and non-hedging purposes. The fund may invest a significant portion of its assets in these types of investments. The fund is classified as non-diversified, which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund.
C000085067 Holdings
Top 10 holdings of Franklin Strategic Real Return Fund by percentage of net assets, from the fund's latest SEC N-PORT filing.
| Holding | % of net assets |
|---|---|
| STIT - Government & Agency Portfolio | 21.68% |
| Tsy Infl Ix N/b | 6.64% |
| Tsy Infl Ix N/b | 4.46% |
| iShares Global Infrastructure ETF | 4.28% |
| Tsy Infl Ix N/b | 3.99% |
| Tsy Infl Ix N/b | 3.38% |
| Tsy Infl Ix N/b | 3.08% |
| Tsy Infl Ix N/b | 2.56% |
| Tsy Infl Ix N/b | 2.51% |
| Tsy Infl Ix N/b | 2.39% |
C000085067 Portfolio Allocation
Asset-class allocation of Franklin Strategic Real Return Fund by percentage of net assets, from the latest SEC N-PORT filing.
| Asset class | Allocation |
|---|---|
| Equity | 59.2% |
| Fixed Income | 39.2% |
| Derivatives | 0.8% |
| Cash & Equivalents | 0.4% |
C000085067 Performance
Total returns for C000085067 (as of 2026-10-01), from SEC filings.
| Period | Total return |
|---|---|
| 1 year | 7.1% |
| 3 years (annualised) | 3.9% |
C000085067 Risk Information
Risk metrics for C000085067, derived from monthly returns in SEC filings.
- 1-year volatility (annualised): 10.4%
C000085067 Costs and Fees
C000085067 costs about $110 per $10,000 invested per year in fund expenses.
- Net expense ratio: 1.10%
- Gross expense ratio: 1.20%
- Portfolio turnover: 15%
- Brokerage commissions: 1.83 bps of average net assets (SEC N-CEN)
C000085067 Cashflows
Over the 12 months to 2024-03, Franklin Strategic Real Return Fund had net inflows of $11.64M, from monthly SEC N-PORT filings.
| Month | Net flow |
|---|---|
| 2024-03 | −$2.98M |
| 2024-02 | −$1.25M |
| 2024-01 | $1.98M |
| 2023-12 | $3.67M |
| 2023-11 | $2.53M |
| 2023-10 | $261.71K |
C000085067 Debt Constituents
Largest debt holdings of Franklin Strategic Real Return Fund by percentage of net assets, from the latest SEC N-PORT filing.
| Debt holding | % of net assets |
|---|---|
| Tsy Infl Ix N/b | 6.64% |
| Tsy Infl Ix N/b | 4.46% |
| Tsy Infl Ix N/b | 3.99% |
| Tsy Infl Ix N/b | 3.38% |
| Tsy Infl Ix N/b | 3.08% |
| Tsy Infl Ix N/b | 2.56% |
| Tsy Infl Ix N/b | 2.51% |
| Tsy Infl Ix N/b | 2.39% |
| Tsy Infl Ix N/b | 2.33% |
| Tsy Infl Ix N/b | 2.12% |
C000085067 Prospectus and SEC Filings
Official Franklin Strategic Real Return Fund filings on SEC EDGAR — prospectus, portfolio holdings and annual reports.
- Prospectus (485BPOS) — filed 2024-01-26
- Prospectus (485BPOS) — filed 2023-01-24
- Prospectus (485BPOS) — filed 2022-01-24
- Portfolio holdings (N-PORT) — filed 2024-05-23
- Portfolio holdings (N-PORT) — filed 2024-02-23
- Portfolio holdings (N-PORT) — filed 2023-11-29
- Annual census (N-CEN) — filed 2023-12-06
- Annual census (N-CEN) — filed 2022-12-07
Related Funds
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Data Sources
ABC INVEST compiles this page from public filings made to the U.S. Securities and Exchange Commission (SEC) through EDGAR: portfolio holdings and monthly cashflows from Form N-PORT, expenses and returns from fund prospectuses (Form 485BPOS) and the SEC DERA Risk/Return Summary data sets, annual data from Form N-CEN, and shareholder reports from Form N-CSR.