Franklin Templeton: The Newest "New Normal": The World in the Wake of COVID-19

26 February 2021 | Professor Trudie Lang, Director, The Global Health Network Centre for Tropical Medicine and Global Health University of Oxford

Professor Rafael Ramírez, Director, Oxford Scenarios Programme

Michael Browne, Portfolio Manager, Martin Currie (a Franklin Templeton Specialist Investment Manager)

David Zahn, CFA, FRM Head of European Fixed Income, Franklin Templeton Fixed Income

PREVIEW

Franklin Templeton and Green Templeton College, University of Oxford, recently launched a three-part series of virtual academic sessions and investor panels focusing on “The Way Forward: Navigating the COVID Challenge.” Academics from Green Templeton College will be sharing and debating their latest research with Franklin Templeton investment professionals, with the hope of delivering actionable insights. Here are some of the key takeaways from the first session held on February 9, 2021.

KEY TAKEAWAYS

• The pandemic pulled the curtain back on an already-high level of global fragmentation and economic inequality, accelerating the impact of these challenges.
• Governments ought to establish measures and policies to enhance their countries’ resilience to any future health care emergency. Our hope is the world takes a more collaborative approach to pandemic management in terms of sharing research and data.
• The logarithmic speed with which pandemics like COVID-19 induce structural and economic change is underappreciated. Companies and governments that best adapt to this rapid pace of change are better positioned for growth going forward.
• The pandemic has revealed exciting investment opportunities in areas related to sustainability and ESG (Environmental, Social, and Corporate Governance), health care, and “green” infrastructure. At the company level, it highlights the virtues of strong business models with robust balance sheets, strong information systems to enable scenario planning and diversified supply chains.
• From an investment perspective, asset owners and managers must review their readiness for shocks. Ultimately, portfolios need to be tested for sustainability and resilience, to guard against a failure of investment returns.

In the first session, “Framing the COVID Challenge,” panelists met virtually to discuss the social, economic, and environmental challenges posed by the pandemic. Subsequent sessions will focus on “Key Lessons for Recovery Strategies” and “Measuring Progress towards a Better World.” This summary comes from the Franklin Templeton Investment Institute.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal. 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.

Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions.

Investments in fast-growing industries, including the technology and health care sectors (which have historically been volatile) could result in increased price fluctuation, especially over the short term, due to the rapid pace of product change and development and changes in government regulation of companies emphasizing scientific or technological advancement or regulatory approval for new drugs and medical instruments.

Special risks are associated with investing in foreign securities, including risks associated with political and economic developments, trading practices, availability of information, limited markets and currency exchange rate fluctuations and policies.

Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay principal on its sovereign debt.

Investing in the natural resources sector involves special risks, including increased susceptibility to adverse economic and regulatory developments affecting the sector.

Diversification does not guarantee profit nor protect against risk of loss.

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.

IMPORTANT LEGAL INFORMATION

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.

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 information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.

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Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.