Ukraine is proving to be a rougher ride. Its bonds have swung wildly during the political crisis over Crimea and the eastern part of Ukraine and are now broadly weaker for the year. Templeton has bought about $7 billion of Ukrainian debt, according to data provider Ipreo, about one-quarter of the country's international bonds. Mr. Hasenstab added to his holdings in the second half of last year and early this year, according to company filings. The Emerging Market Bond Fund, which has $6.2 billion in assets, had 10.6% of its portfolio in Ukrainian bonds as of the end of March. It has seen outflows of $1.26 billion in the first three months of the year, according to data provider Morningstar. Mr. Hasenstab added to these holdings in March as the political crisis intensified, according to company filings. The Emerging Market Bond Fund has the highest Ukraine exposure among Franklin Templeton's funds. A version of the Global Bond Fund marketed to European investors, with assets of $39 billion and a 3% allocation to Ukraine, has seen outflows of $4.93 billion, according to the company. Outflows in the $71 billion U.S. version of the Global Bond Fund, with a 4.5% allocation, have been $570 million, according to Morningstar. Overall, U.S. and European funds investing in emerging-market debt saw outflows of just under 4%, the Morningstar data show. In the first quarter, the Emerging Market Bond Fund lost 0.4%, while the Global Bond Fund gained 0.7%, according to Franklin Templeton. One investor, who pulled cash out of the Emerging Market Bond Fund this year, said: «When you buy Franklin Templeton you know what you get in terms of high volatility. We reduced exposure to the firm earlier in the year to cut volatility in our portfolio.» Two investors in the Emerging Market Bond Fund said individual investors, who tend to be more skittish than institutional clients, were behind a large part of the outflows. A Franklin Templeton spokeswoman said the fund is a «very niche strategy out [of] the range of global bond strategies managed by Michael Hasenstab, which accounts for $185 billion under management.» She declined to comment further. On a conference call with analysts Wednesday, Franklin Templeton Chief Executive Greg Johnson said much of the outflow from European funds can be attributed to investors allocating more of their money to stock and hybrid funds instead of bonds as Europe recovers from recession. Mr. Hasenstab couldn't be reached to comment, and the spokeswoman declined to make him available. Franklin Templeton has been reassuring investors over its holdings of Ukraine's bonds as the crisis escalates, according to a person familiar with the firm's business. On Thursday, Russian President Vladimir Putin called on Ukraine to withdraw military forces from the southeast of the country, a move that would effectively cede control to the pro-Russian forces that have taken over about a dozen cities in the border area and are pushing for a referendum on its status. Ukrainian government debt has endured a bumpy ride this year. A dollar-denominated bond maturing in 2023 yielded 9.14% at the end of 2013, according to Tradeweb. The yield climbed to as high as 11.5% in February, before falling back below 9%. As the crisis rumbles on, Ukraine bonds have fallen out of favor once more, and the yield on Thursday stood at 10.5%. Bond yields rise as prices fall. In comparison, a 10-year German bond yielded 1.47% on Thursday, according to Tradeweb. Mr. Hasenstab himself has been on a charm offensive. Last month, he visited Kiev. In a video filmed in the Ukrainian capital and posted on the firm's website, Mr. Hasenstab strolled the streets and sung Ukraine's praises. «We are very encouraged by the long-term potential,» he said in the video. «It's a country that despite some of the short-term fiscal issues has very little indebtedness, close to 40% debt to [gross domestic product], which is a very manageable amount.» Some investors said they have some concerns the Ukraine bet could turn sour but are willing to keep the faith with Mr. Hasenstab given his excellent track record. His Global Bond Fund has returned 52.5% over the past five years, according to Franklin Templeton. In comparison, the JPMorgan Global Government Bond Index has returned 21.5%, according to J.P. Morgan. «I think Ukraine is more of a marketing issue for [Franklin Templeton] than an investment issue,» said one investor who held on to substantial holdings in Mr. Hasenstab's funds during the first quarter of 2014. «Hasenstab would probably rather manage the fund rather than go on a tour to calm people down. But I think the worst is behind them, and I wouldn't have a problem investing with them in the future because of this.»