Franklin Templeton Investments says the rout in emerging markets may be nearing a bottom, though reckons there are still countries that will suffer, like the Philippines. Given the uncertainty, the money manager is keeping a net neutral dollar position, while making trades including shorting the Philippine peso, as well as betting the Aussie will decline against the New Zealand dollar, said Chris Siniakov, managing director of fixed income for Australia at Templeton. \u201cWe are trying not to make the big dollar decision at the moment because we feel like it could pop either way,\u201d Siniakov said in an interview in Sydney. \u201cWe are preferring to choose where there\u2019s relative value and who we expect to be winners and losers in the emerging market complex.\u201d The rout in emerging-market assets this year was spurred by higher Treasury yields and U.S. tax cuts, alongside angst over the escalation of trade restrictions between the U.S. and China. Still, Templeton\u2019s willingness to sit out a directional bet on the dollar highlights how divided money managers are after the greenback has gained more than 5 percent since mid-April. JPMorgan Asset Management and Man Group Plc are among those expecting further strength. Others such as DoubleLine Capital\u2019s Jeffrey Gundlach see a decline by year\u2019s end. The greenback\u2019s resurgence has prompted President Donald Trump to previously jawbone the currency. That\u2019s not deterring speculative investors such as hedge funds that are still betting on further dollar gains, data from the Commodity Futures Trading Commission show. It could go either way, Siniakov said. The dollar might appreciate more if investors continue to seek haven assets amid worsening U.S. and China trade relations, though it may be weaker if the U.S. economy starts to overheat and the chance of a slowdown starts to weigh on investors\u2019 minds, he said. \u201cFor us here locally we\u2019re focusing on the Asia region, it\u2019s about countries that are in a better fiscal position, good domestic stories and good policy actions by their leaders,\u201d said Siniakov. Some emerging markets, including Turkey and Indonesia will continue to see pressure, he said. The core of Templeton\u2019s fixed income portfolio consists of investment-grade corporate bonds. But even there, things are looking expensive, he said. Below are edited excerpts of an interview with Siniakov and Andrew Canobi, director of fixed income for Australia at Templeton, the California-based money manager, which oversees $722 billion in assets: 1. What else are you buying? We\u2019re continuing to hold inflation protection - we play in the zero coupon swap space in U.S. inflation markets. If late-cycle inflation does spike in the U.S., then we have some protection. We\u2019ve also taken some options on some credit-default swap indices. 2. Why short the Aussie? We\u2019re looking at an Australian dollar range of 70 to 75 U.S. cents for now. The Aussie dollar is being driven lower not by domestic factors, even though the property market headlines have some offshore investors shorting the Aussie. It\u2019s a risk currency that\u2019s caught up in the emerging market malaise. Until those issues go away, the path for the Aussie is likely lower. On the other hand, New Zealand\u2019s economy is not in bad shape. The market\u2019s gone from a tightening bias to now a little bit of easing. The kiwi dollar suffered because of that. We still think the hurdle\u2019s pretty high for an easing. 3. Have we seen the end of the emerging market rout? We are closer to a bottom, although I don\u2019t know that we\u2019ve seen a real capitulation in emerging markets. There\u2019s been pressure, but in some ways it\u2019s been orderly. We haven\u2019t seen the shock and awe, for example, through a real dive in Treasury yields and a full flight to quality. 4. What\u2019s your view on the Fed? The market\u2019s priced for maybe 2.5 interest-rate hikes in the U.S. over the next 12 months. We think the most important metric is going to be financial asset prices - as long as they remain stable, the Fed is emboldened to keep lifting rates.