Notification of changes to the underlying fund of R129 Templeton Asian Bond (USD)

26 May 2022

R129 Templeton Asian Bond (USD)

We have been notified by the Board of Directors of Franklin Templeton Investment Funds (the “Company”) of the following upcoming changes to the underlying fund of the ILP sub-fund. These changes will take effect from 24 June 2022 (the “Effective Date”). The Company believes there will be no material impact on the way the underlying fund of the ILP sub-fund is managed, its portfolio’s composition, risk profile or synthetic risk reward indicator, nor on the fees charged, as a result of these changes

Summary of changes

The Company has advised that it will be updating the investment policy to the underlying fund of the ILP sub-fund. The underlying fund of the ILP sub-fund will be reclassified from Article 6 to Article 8 of the Sustainable Finance Disclosure Regulation in order to better reflect the Environmental, Social and Governance (“ESG”) methodology applied to the funds. The below bullet points summarise how these changes will work in practice. 

• Employing a proprietary ESG rating to assess each country that issues sovereign bonds that are existing or potential investments for the fund. This methodology captures a country’s current ESG score based on a variety of sub-categories but more importantly any expected improvement or deterioration in the country’s ESG practices.
• The investment manager scores each country that issues sovereign debt that may be potential investments for the fund on a scale of 0-100 (100 being the highest).
• For corporate issuers, the Fund utilises ESG ratings according to an external provider.
• The weighted average base ESG score of the sovereign and corporate issuers in the Fund’s portfolio is higher than the average base ESG score of the Fund’s respective investment universe.

As a consequence, Sustainability Risk will be added to the risk considerations of the underlying fund, and the investor profile sub-section of the underlying fund will be updated accordingly, as per the notes at the end of the Appendix.

A full breakdown of the changes can be found in the Appendix document opposite.

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We have contacted policyholders and their financial advisers to notify them of the changes; a sample of which can be found opposite.

Should you have any questions regarding these changes, please contact the Investment Marketing Team.