Franklin Floating Rate Daily Access Fund

Fund Description

The fund seeks a high level of current income and, secondarily, preservation of capital, by investing predominantly in floating interest rate senior secured corporate loans (floating-rate loans) and corporate debt securities.

Strategy Statement

"We invest in floating-rate loans, which pay interest that adjusts periodically to current rates, generally making them less sensitive to interest rate volatility than fixed-rate securities. "

Reema Agarwal, CFA®

Management

Reema Agarwal, CFA

Reema Agarwal, CFA®

  • Joined Franklin Templeton in 2004
  • Managed Fund Since 2019
Justin G. Ma, CFA

Justin G. Ma, CFA®

  • Joined Franklin Templeton in 2006
  • Managed Fund Since 2013
Margaret Chiu, CFA

Margaret Chiu, CFA®

  • Joined Franklin Templeton in 2012
  • Managed Fund Since 2019

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Investment Philosophy

We believe that independent credit research and active portfolio management can achieve competitive levels of floating rate income, while significantly reducing uncompensated credit risk and principal volatility, for those investors desiring a portfolio of below investment grade senior secured floating rate bank debt. Our core portfolios are primarily managed to generate attractive levels of income while seeking to minimize default risk, and as such, do not explicitly seek price appreciation at the expense of high default exposure.

Investment Process

Fundamental Analysis

  • Independent, bottom-up credit research incorporating proprietary information.

Disciplined Approach

  • Focus on capital preservation by seeking higher quality issues within the asset class with strong asset coverage.
  • Avoid companies with high expected defaults or high expected losses in event of default.
  • Maintain diversification through a disciplined portfolio construction process.
  • Focus primarily on new-issue market where we believe the risk/return profiles are the most favorable.
  • Add selectively to existing positions through secondary market.

Risk Management

  • Integrate risk management in portfolio construction process by estimating expected frequency of default and expected loss in event of default, as well as total value at risk.

Integrated Research Approach

The Franklin Templeton Floating Rate Debt Group leverages the insights of other fixed income and equity professionals throughout the firm.

Rating

Overall Morningstar Rating As of 11/30/2019

Rating Category: Bank Loan

Morningstar
The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating [further-information] As of 11/30/2019

Years Ratings Funds
in category
3
1 Stars
218
5
3 Stars
195
10
2 Stars
77

Morningstar Style Box As of10/31/2019

Strategy, Benefits, Results

Strategy

  • We invest predominantly in floating interest rate senior secured corporate loans and corporate debt securities.
  • We seek higher credit-quality loans that may potentially help the fund maintain a more stable net asset value than the fund's benchmark index.
  • We look for companies with strong management teams and market leadership.

Benefits

  • Dedicated Floating Rate Research Team. We have a team solely focused on floating-rate loans analysis, separate from high-yield bonds.
  • Access to In-Depth Investment Expertise. Whether we want to look at a security from a credit or equity perspective to get a holistic understanding of the security, we have the ability to draw upon the extensive research resources of Franklin Templeton's fixed income and equity teams.
  • Diversified Portfolio. The fund's diversification helps to potentially reduce credit risk by spreading assets across many different issuers and industries.

Selling The Fund

  1. Highlight the fund's adherence to stringent risk management disciplines.
  2. Mention how the fund's diversification helps to potentially reduce credit risk by spreading assets across many different issuers and industries.
  3. Emphasize how floating-rate loans are generally less sensitive to interest-rate volatility than fixed-rate securities.