Why was Franklin Templeton Investments not able to see the economic downturn coming in late 2008?
We did see in advance problems in the financial sector. Certain funds, including the Templeton International Stock Fund, shifted to an underweight in financials in September 2008. However, it was difficult at that time to see the unprecedented domino effect that followed, as problems in the financial sector were magnified through securitization, resulting in a market-wide crisis of confidence (and credit). The painful end result of the credit crisis was also unanticipated by governmental and private sector economists around the world. Nevertheless, the unprecedented nature of the past year has given our investment managers lessons that will reinforce their ability to better assess the strength of the companies we invest in. The Templeton value investing strategy is best suited for the type of value-driven market that we are currently in and we will continue to employ our discipline to our unitholders benefit.
