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Ed Perks: Equity and Fixed Income Opportunities

Apr 01, 2015

Featuring:  Ed Perks, CIO, Director of Portfolio Management, Portfolio Manager, Franklin Equity Group

  • Our view is that there will likely be a period of more normalization of short-term interest rates.
  • Globally, where we saw economies decelerate in 2014 and many central banks are, in fact, at a much earlier stage of QE and trying to stimulate activity; to the extent that those efforts are successful, I think we could see longer-term interest rates moved to a bit higher level over time.
  • At this point, we think there are some opportunities in the utilities sector that are longer-term in nature.
  • During a period of potentially rising interest rates, we think dividend growth will be an important factor in delivering performance in the utility sector.
  • In particular, some of the opportunities we are seeing are in the automotive sector and the health care sector.
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Important Legal Information

The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of April 1, 2015, and may change without notice. A portfolio manager’s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund’s portfolio selection process. Holdings are subject to change.

What Are the Risks?
All investments involve risks, including possible loss of principal.

Franklin Income Fund
All investments involve risks, including possible loss of principal. The fund’s share price and yield will be affected by interest rate movements. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The fund’s portfolio includes a substantial portion of higher-yielding, lower-rated corporate bonds because of the relatively higher yields they offer. Floating-rate loans are lower-rated, higher-yielding instruments, which are subject to increased risk of default and can potentially result in loss of principal. These securities carry a greater degree of credit risk relative to investment-grade securities. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. These and other risk considerations are discussed in the fund’s prospectus.

For more information on any of our funds, contact your financial advisor or download a free prospectus. Investors should carefully consider a fund’s investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.

Footnotes

  1. As of 2/28/15, Fixed income investments represented 41.93% of net assets of Franklin Income Fund. Portfolio Holdings are subject to change without notice and may not represent current or future portfolio composition.

  2. Source: Barclays Capital POINT/Global Family of Indices. © 2015 Based on Barclays US Aggregate Credit Corporate High Yield Index. Yields were below 5.5% from 6/23/2014 through 7/30/2014. Yields were at 7.03% on 12/16/2014. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee of future results.

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