Templeton Global Bond fund faces redemptions in three years

BOSTON: Franklin Resources’ Templeton Global Bond, this year’s best-selling mutual fund in the US, suffered its first month of redemptions in three years in November after performance lagged behind rivals.

Investors pulled $487 million from the $61 billion mutual fund managed by Michael Hasenstab, the first withdrawal since November 2008, according to Chicago-based Morningstar. The fund, which beat about 98% of its rivals over the past five years, attracted net deposits of $15 billion in the first 10 months of 2011, Morningstar data show.

“This fund clearly has been the biggest driver of their growth for some time,” Michael Kim, an analyst with Sandler O’Neill & Partners in New York, said in a telephone interview. “It is going to take better performance and a better market backdrop to turn the flows around.” Concerns that the fund’s slumping performance may hamper San Mateo, California-based Franklin’s ability to win investor cash have weighed on the stock. The shares climbed 0.3% from the end of September through yesterday, compared with a 10% gain for the Standard & Poor’s index of asset managers and custody banks.

Douglas Sipkin of Ticonderoga Securities in New York cut his rating on the stock to “neutral” from “buy” earlier this month. Kenneth Worthington, an analyst with JPMorgan Chase in New York, downgraded Franklin to “underweight” from “neutral” in October.

The fund fell 2.6% this year through December 12, worse than 92% of its peers, Bloomberg data show. Matt Walsh, a spokesman for Franklin, didn’t respond to an e-mailed request for comment.