Hasenstab nets €1.9bn profit
Franklin Templeton fund is biggest global owner of Irish sovereign bonds
financial whizzkid Michael Hasenstab has made about €1.9bn on his bet on the Irish economy, the Sunday Independent has found.
Hasenstab, one of the most successful fund managers in the world, is vice-president of Franklin Templeton Investments. Hasenstab has snapped up about a tenth of Ireland's sovereign debt over the last two years. This sovereign debt makes up about 8 per cent – or around €3.1bn – of Hasenstab's Templeton Global Bond Fund.
The Templeton Global Bond Fund includes seven Irish government bonds, according to the latest breakdown of investments held in this fund. Six of these bonds have made an average return of 86 per cent over the last two years, according to bond experts contacted by this paper. This means that most of these bonds have almost doubled in price.
One of the bonds, which is due to mature in 2025, made a return of about 95 per cent over the last two years, according to David Ryan, head of fixed income with Setanta Asset Management. As this fund was worth about €784m at the end of March 2013, Hasenstab has made a return of about €375m on that bond so far, according to this paper's analysis.
Another bond, which is due to mature in 2020, has made a return of 88 per cent since June 2011, according to Ryan. Hasenstab has seen the value of this fund – worth about €1.5bn at the end of March – climb by about €701m over the last two years.
"Irish bonds have delivered strong performance since the lows of 2011," said Ryan.
"Investors would have received around a 90 per cent return given price appreciation and clipped coupons since June 2011."
Ireland's decision not to default on its sovereign debts has made fortunes for shrewd investors, who gambled that the country would repay its borrowings.
Enda Kenny's Government agreed to follow the path dictated by the EU/IMF/ECB Troika following the 2010 bail out. This has led to more than €28bn taken out of the economy through cuts or tax hikes, slowly strangling the remaining tax payer.