Franklin Templeton Investments Corp. Monday introduced the Templeton Global Bond Hedged Yield Class fund and the Bissett Canadian Short Term Bond Yield Class fund to meet the growing demand among Canadians for tax-efficient returns.

The two new funds use a derivative strategy to provide returns in the form of capital gains instead of interest income for tax purposes.

“With interest rates near historic lows, Canadian investors are looking for ways to increase their after-tax income,” says Don Reed, president and CEO of Toronto-based Franklin Templeton Investments Corp.

Templeton Global Bond Hedged Yield Class

This new fund reduces the potential impact of exchange rate fluctuations between the Canadian and U.S. dollars by adding a USD – CAD currency overlay to the forward contracts used as part of its derivative strategy.

The fund will invest in a portfolio of Canadian equity securities and enter into forward contracts under which it will forward sell the equity securities at a future date. This will provide a return in a tax-efficient manner similar to its reference fund, the Templeton Global Bond Fund.

“This new fund will give investors exposure to strategies pioneered by our award-winning global fixed income team while reducing currency risk,” says Reed.

In addition, the fund is available in a Series T version designed to provide investors with tax-efficient monthly cash flows through Return of Capital (ROC).

Michael Hasenstab, who manages Templeton Global Bond Fund, will also manage Templeton Global Bond Hedged Yield Class.

Bissett Canadian Short Term Bond Yield Class

This new fund will invest in a portfolio of Canadian equity securities and enter into forward contracts under which it will forward sell the equity securities at a future date. This will provide a return in a tax-efficient manner similar to its reference fund, the Bissett Short Term Bond Fund.

Heather McOuatt and Darcy Briggs, who co-manage Bissett Canadian Short Term Bond Fund, will co-manage Bissett Canadian Short Term Bond Yield Class.

Bissett Canadian Dividend Fund available in Corporate Class

Bissett Canadian Dividend Fund, which invests primarily in dividend paying or income producing Canadian securities, is now available in a tax-deferred Corporate Class structure. In addition, investors may purchase Series T units of the fund, providing tax-efficient monthly cash flows through Return of Capital (ROC).

Juliette John, who is the lead manager of Bissett Canadian Dividend Fund, will also manage the Corporate Class version.

The new funds are part of Franklin Templeton’s Corporate Class structure. The structure allows investors to switch between funds and portfolios while deferring taxable events until they redeem.

IE