Franklin Convertible Securities Fund

This fund or share class has been closed to new investors.

This fund or share class has been closed to new investors.

Fund Description

The fund seeks to maximize total return, consistent with reasonable risk, by investing at least 80% of its net assets in convertible securities. Convertible securities are bonds or preferred stock that may be converted into common stock.

Strategy Statement

"We believe convertible securities are attractive because they offer the growth potential of stocks with the potential for high current income and less downside risk generally offered by bonds."

Management

Alan Muschott, CFA

Alan Muschott, CFA®

  • Joined Franklin Templeton in 1998
  • Managed Fund Since 2002
Matt Quinlan

Matt Quinlan

  • Joined Franklin Templeton in 2005
  • Managed Fund Since 2007
Eric Webster, CFA

Eric Webster, CFA®

  • Joined Franklin Templeton in 2011
  • Managed Fund Since 2016

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Balanced

We believe our bottom-up approach to investing in "balanced" convertible securities, with their potential for common stock price appreciation and reduced downside risk from their fixed-income attributes, can offer solid long-term results for our shareholders.

Fundamental

We seek to exploit a fundamental view that differs from the “market consensus” regarding growth potential or valuation.

Diversified

We seek to invest in a diverse set of securities across industry sectors and market capitalizations and styles.

Long Term

We seek financially strong companies with favorable secular growth potential and sustainable competitive advantages. Our analysis includes an assessment of any material Environmental, Social and Governance (ESG) factors on the long-term risk and return profile of a company. We seek to apply a long-term perspective through the spectrum of market cycles.

INITIAL UNIVERSE

  • 500+ convertible bonds and convertible preferred stocks

HIGH YIELD AND INVESTMENT GRADE CORPORATE TEAMS

  • Conduct bottom-up, fundamental analysis
  • Determine credit metrics outlook
  • Evaluate material ESG factors

EQUITY TEAM

  • Conduct bottom-up, fundamental analysis
  • Determine equity price appreciation potential
  • Evaluate material ESG factors

CONVERTIBLE SECURITIES TEAM

  • Overlay convertible research on fundamental analysis from fixed income and equity teams
  • Seek balanced convertibles that we believe will provide solid long-term total return

CONSTRUCT PORTFOLIO

  • Monitor fundamentals
  • Create portfolio of approximately 60–75 securities

MONITOR PORTFOLIO

  • Review fund holdings
  • Portfolio Review Committee
  • Conduct ongoing screening and risk management
  • Review for sale if:
    • Convertible is no longer balanced
    • Fundamentals deteriorate
    • Underlying common stock reaches price target
    • Factors impacting security’s risk/return characteristics warrant sale

Rating

Overall Morningstar Rating As of 10/31/2019

Rating Category: Convertibles

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 As of 10/31/2019

Years Ratings Funds
in category
3
5 Stars
75
5
5 Stars
61
10
4 Stars
45

Morningstar Style Box As of09/30/2019

Strategy, Benefits, Results

Strategy

  • Identify Imbalances in Price. We seek to identify quality companies selling at inexpensive prices relative to their intrinsic values.
  • Find the Upside Potential. We typically look for "balanced" convertible securities that we believe offer an attractive risk/reward profile.
  • Rely on Sound Analysis. We assess individual issuers and security terms on a case-by-case basis, utilizing the equity and credit analyses produced by our experienced team.

Benefits

  • Allows investors to participate in the upside potential of the underlying common stock with potentially less downside risk due to its fixed-income characteristics.
  • Experienced management team with over 36 years of combined industry experience.
  • Broad diversification spread across multiple industries.

Selling The Fund

  1. Highlight the team's multi-asset class background.
  2. Point out the two-pronged potential benefit of investing in convertible securities.