Franklin Templeton's family firm moves hedge fund to Singapore

Tano Capital, the family office of the founders of Franklin Templeton Investments, opened a unit in Singapore as it expects investors in its hedge fund to benefit from a strong local currency.

Tano Capital is changing the jurisdiction of Tano Global Hard Assets Fund, a long-short hedge fund which focuses on commodities, to Singapore from Delaware, said Charles E. Johnson, founder of the San Mateo, California-based firm.

 

The fund, currently in U.S. dollars, will be denominated in the Singapore currency starting next month, Johnson, 55, said in an interview yesterday. The Singapore dollar has climbed 11% in the past 12 months, the best performer in Asia outside Japan, as policy makers used the currency as their main tool to fight inflation.

 

“The Singapore dollar is a much more sensibly managed currency than a lot of other currencies; we would love to give our investor base, which is global, that opportunity,” said Johnson, the former co-president of Franklin Resources Inc., owner of the Franklin and Templeton mutual funds. “The currency will remain one of the stronger ones globally.”

 

The Monetary Authority of Singapore said this month it would allow further gains in the currency in the third tightening of monetary policy in a year. Unlike most central banks that use interest rates to control inflation, Singapore conducts monetary policy through its exchange rate, adjusting the pace of appreciation or depreciation against an undisclosed band of currencies.

 

ECONOMIC GROWTH

The island’s gross domestic product rose at an annual rate of 23.5% last quarter from the previous three months, more than twice the pace economists forecast, according to preliminary estimates from the trade ministry.

 

“The Singapore government manages the Singapore finances very commendably,” said Johnson, the grandson of Rupert Johnson Sr., the founder of Franklin Templeton Investments.

 

The US$80 million ($98.5 million) Tano Global Hard Assets Fund invests in shares of commodity companies including oil, mining and agricultural firms, and bets on commodity futures, Johnson said.

 

“Interesting commodity companies” such as Wilmar International, the world’s biggest palm-oil processor, and Olam International, a supplier of agricultural commodities, are based in Singapore, he said.

 

Still, the Singapore stock market is only the eighth largest among 16 in the Asia-Pacific region tracked by Bloomberg, lagging behind countries including Japan, China and India.

 

KEY SHIPPING AREA

“Singapore geographically is located in a very key area in terms of shipping,” Johnson said. “There’s a lot of data about what’s being moved around the world that flows through the Singapore port.”

 

Tano Capital, which opened its Singapore office last week, manages about US$400 million, including private-equity investments in China and India. The firm, which also manages external investors’ money, will start with an initial team of three people in the city-state, Johnson said.

 

There are about 50 established family offices in Asia outside of Japan following investment processes and business objectives similar to their counterparts in the U.S. and Europe, according to Scorpio Partnership, a London-based firm that provides research to the wealth-management industry. Asian economies have recovered faster from the global recession than the U.S. and Europe, led by China and India.

 

“Asia is where the action is, where all the high growth is going to happen over the next 20 years,” Johnson said. “That’s also what attracts us to Singapore.”