K2 - AN ALTERNATIVE FOR NAVIGATING
VOLATILE MARKETS

Franklin K2 Liquid Alternative Funds

Unpredictability of the financial markets has many investors seeking new ways to diversify traditional asset allocations. Adding hedge strategies to your portfolio may help by offering:

  • The Potential for Reduced Volatility
  • New Source of Returns
  • Additional Diversification

An allocation to hedge strategies may help return potential without significantly increasing risk1

Hedge strategies focus on an objective designed to address key investor goals such as downside protection and absolute returns among others. They may invest in both traditional assets such as stocks and bonds as well as non-traditional assets. Sophisticated investment techniques and derivatives may be used to capture specific type of investing opportunities.

20-Year Period Ending 31 March 2018

  • Hedge Fund
  • Equity
  • Fixed Income

Past performance is not an indicator or a guarantee of future performance.
For illustrative purposes only; not representative of any Franklin, Templeton or K2 Fund performance or portfolio composition.

Our range of K2 Liquid Alternative Funds

Expand All | Collapse All

  • Franklin K2 Alternative Strategies Fund*

    A multi-strategy fund that gives you exposure to four distinct hedge strategies.

    Franklin K2 Long Short Credit Fund*

    A fund leveraging a diversified credit strategy to hedge against interest rate and credit-related risks.

    Franklin K2 Global Macro Opportunities Fund*

    A fund that pursues macro trends and pricing opportunities across the globe.

  • Franklin K2 Alternative Strategies Fund*

    Add to your traditional portfolio for:

    • lower volatility
    • reduced correlation with stocks and bonds

    Franklin K2 Long Short Credit Fund*

    Add to your traditional bond portfolio for:

    • reduced risk
    • better downside protection

    Franklin K2 Global Macro Opportunities Fund*

    Add to your traditional stock portfolio for:

    • improved diversification
    • reduced risk with minimal impact to returns
  • Franklin K2 Alternative Strategies Fund*

    Invests across four hedge strategies, always adjusting to changing market conditions

    Target allocations:2

    Relative Value
    30% - 45%

    Long Short Equity
    25% - 40%

    Event Driven
    10% - 30%

    Global Macro
    0% - 30%

    Franklin K2 Long Short Credit Fund*

    Offers a multi-sector credit diversification with three complementing hedge strategies

    Target allocations:2

    Credit Long Short
    30% - 70%

    Structured Credit
    20% - 60%

    Emerging Market
    Fixed Income:
    0% - 30%

    Franklin K2 Global Macro Opportunities Fund*

    Leverages two distinct approaches to global macro hedge strategies


    Target allocations:2

    Systematic
    0% - 80%

    Discretionary
    0% - 80%

  • Franklin K2 Alternative Strategies Fund*

    • Offers alternative sources of returns
    • Provides equity downside protection

    Franklin K2 Long Short Credit Fund*

    • Provides investors with additional sources of returns
    • Reduces correlations to traditional fixed income markets

    Franklin K2 Global Macro Opportunities Fund*

    • Pursues more consistent portfolio returns
    • Seeks to limit the impact of negative events on equity markets

Why K2 Advisors?

  • 100+ K2 employees in offices around the world.
  • Experience in developing institutional products and customised solutions.3
  • Benefits from the global risk management, compliance, trading, technology and operations resources at Franklin Templeton Investments
  • An average of 32 years of industry experience between the fund’s portfolio managers3

FIVE REASONS TO CONSIDER HEDGE STRATEGIES

1. Access to Your Money on a Daily Basis

2. A Regulated Investment

3. Low Minimum Investment

4. Limits on Leverage

5. Holdings Reported Monthly

WHAT ARE THE KEY RISKS?

Franklin K2 Alternative Strategies Fund

The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. The Fund seeks to achieve its targeted investment objective by allocating its assets across multiple “alternative” strategies and by investing in a wide range of assets. Such assets and investment instruments have historically been subject to price movements due to such factors as general stock market volatility, sudden changes in interest rates, or fluctuations in commodity prices. The Fund will seek to limit volatility using hedged strategies. As a result, the performance of the Fund can fluctuate moderately over time. Credit risk: the risk of loss arising from default that may occur if an issuer fails to make principal or interest payments when due. This risk is higher if the Fund holds low-rated, non-investment-grade securities. Currency risk: the risk of loss arising from exchange-rate fluctuations or due to exchange control regulations. Derivatives risk: the risk of loss in an instrument where a small change in the value of the underlying investment may have a larger impact on the value of such instrument. Derivatives may involve additional liquidity, credit and counterparty risks. Liquidity risk: the risk that arises when adverse market conditions affect the ability to sell assets when necessary. Reduced liquidity may have a negative impact on the price of the assets. Operational risk: the risk of losses resulting from errors or failures arising from the people, systems, service providers or processes upon which the Fund depends. Targeted return risk: there is no guarantee that the Fund will achieve its targeted objective. The Fund seeks to achieve its returns over a full market cycle to achieve a positive return. Capital invested in the Fund may decline in value. For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.

Other significant risks include: credit risk, derivatives risk, liquidity risk, operational risk, targeted return risk. For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.

Franklin K2 Long Short Credit Fund

The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested.

Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. The Fund seeks to achieve total return over a full market cycle by allocating its assets across multiple “alternative” Long/Short strategies and by investing in a wide range of assets, with the ability to actively use financial derivative instruments. Such securities and investment instruments have historically been subject to price movements due to such factors as sudden changes in interest rates, changes in the financial outlook or perceived credit worthiness of securities issuers, or fluctuations in currency markets. As a result, the performance of the Fund can fluctuate moderately over time. Counterparty risk: the risk of failure of financial institutions or agents (when serving as a counterparty to financial contracts) to perform their obligations, whether due to insolvency, bankruptcy or other causes. Credit risk: the risk of loss arising from default that may occur if an issuer fails to make principal or interest payments when due. This risk is higher if the Fund holds low-rated, non-investment-grade securities. Currency risk: the risk of loss arising from exchange-rate fluctuations or due to exchange control regulations. Derivatives risk: the risk of loss in an instrument where a small change in the value of the underlying investment may have a larger impact on the value of such instrument. Derivatives may involve additional liquidity, credit and counterparty risks. Emerging markets risk: the risk related to investing in countries that have less developed political, economic, legal and regulatory systems, and that may be impacted by political/economic instability, lack of liquidity or transparency, or safekeeping issues. Liquidity risk: the risk that arises when adverse market conditions affect the ability to sell assets when necessary. Reduced liquidity may have a negative impact on the price of the assets. Operational risk: the risk of losses resulting from errors or failures arising from the people, systems, service providers or processes upon which the Fund depends.

For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.

Other significant risks include: counterparty risk, credit risk, currency risk, derivatives risk, emerging markets risk, liquidity risk, operational risk. For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.

Franklin K2 Global Macro Opportunities Fund

The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments.The Fund seeks to achieve total return over a full market cycle by allocating its assets across multiple “alternative” macro-oriented strategies and by investing in a wide range of assets, with the ability to actively use financial derivative instruments. Such assets and investment instruments have historically been subject to price movements due to such factors as general stock market volatility, sudden changes in interest rates, or fluctuations in commodity prices. As a result, the performance of the Fund can fluctuate moderately over time. Credit risk: the risk of loss arising from default that may occur if an issuer fails to make principal or interest payments when due. This risk is higher if the Fund holds low-rated, non-investment-grade securities. Currency risk: the risk of loss arising from exchange-rate fluctuations or due to exchange control regulations. Derivatives risk: the risk of loss in an instrument where a small change in the value of the underlying investment may have a larger impact on the value of such instrument. Derivatives may involve additional liquidity, credit and counterparty risks.

Liquidity risk: the risk that arises when adverse market conditions affect the ability to sell assets when necessary. Reduced liquidity may have a negative impact on the price of the assets.

Operational risk: the risk of losses resulting from errors or failures arising from the people, systems, service providers or processes upon which the Fund depends. Targeted return risk: there is no guarantee that the Fund will achieve its targeted objective. The Fund seeks to achieve its returns over a full market cycle to achieve a positive return. Capital invested in the Fund may decline in value.

For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.

Other significant risks include: credit risk, currency risk, derivatives risk, operational risk, targeted return risk, liquidity risk. For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.

The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future performance. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be affected by currency fluctuations.