Franklin Templeton is looking to further its reach in Latin America by partnering with a Buenos Aires-based asset manager to crack the Argentine domestic market.
Andrew Ashton, Templeton's head of the Americas excluding the US, told Citywire Americas his group is in the process of signing a general agreement with an Argentinian fund firm, whose name cannot yet be revealed.
He added that once the deal is finalized and receives regulatory approval new product launches would follow soon after.
'We started talking to them formally about 12 months ago. Looking at how we might provide an investment solution on the back of the tax amnesty and reforms the Argentine government put forward.'
Argentina's successful tax amnesty brought over $117 billion of wealth out of the shadows. Its fiscal reforms are expected to continue to attract wealth back to the country and its formally robust financial services industry.
The amnesty's success was a key reason for Templeton seeking a local partner, said Ashton, as it has brought forward new prospects for the country.
He declined to give further detail on how the agreement would take shape in terms of who would be managing the products, but expects there to be a mix of predominantly local and regional fixed income funds on offer.
Franklin Templeton has had an office in Argentina since 1995, which most recently served as a hub for supporting and distributing to South American markets. It has a fixed income manager in Argentina and an emerging market equity analyst based in Argentina.
The US firm is one of the largest and best known foreign fund managers in Latin America, with more than $20 billion in assets under management in the region, and Ashton said they are also seeking new opportunities elsewhere.
‘We continue to see these [Latin American] markets open up and we’d like to go deeper and build greater capabilities in selective markets and channels.’
One area Templeton sees potential is within local banks throughout Latin America, said Ashton.
‘Large domestic banks that haven’t traditionally used third party managers or global managers offer opportunities to expand your distribution agreements,’ he said.
‘In general, when you get periods of high interest rates or periods of volatility, in markets or currency, people think more about diversifying their portfolio.
'Banks are open to offering offshore products and certainly opening up to offering offshore products with a large reputable firm like ourselves so we’ve seen that trend.’
In Mexico and Brazil the firm is also looking to grow its domestic capabilities.
‘[Our business in] Mexico and Brazil is small compared to the total size of the local asset management market. There’s a large amount of room to grow across the channels both in the institutional and retail.’
Last month, the firm also launched a new office in Chile to strengthen its distribution to non-pension fund investors in the Andean region and hired Gonzalo Ramírez Correa from Legg Mason.