Fund Description

The fund seeks to provide a high level of current income consistent with prudent investing, while seeking preservation of capital. The fund invests primarily in investment grade debt securities and investments, which may be represented by derivatives that provide exposure to debt securities. The fund targets an estimated average portfolio duration of three years or less.

Strategy Statement

"By focusing on low duration, high-quality investments across various sectors of the fixed income market, we strive to offer a competitive yield, while maintaining a relatively stable net asset value. "

Management

Sonal Desai, Ph.D

Sonal Desai, Ph.D

  • Joined Franklin Templeton in 2009
  • Managed Fund Since 2018
David Yuen, CFA

David Yuen, CFA®

  • Joined Franklin Templeton in 1988
  • Managed Fund Since 2016
Christine S. Chou

Christine S. Chou

  • Joined Franklin Templeton in 2004
  • Managed Fund Since 2019
Kent Burns, CFA

Kent Burns, CFA®

  • Joined Franklin Templeton in 1994
  • Managed Fund Since 2004

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Investment Philosophy

We believe that applying a disciplined process to investing across fixed income sectors, seeking opportunities to add value in the market cycles ahead, should result in attractive risk-adjusted returns over the long term for the fund. The fund’s investment goal is to provide a high level of current income as is consistent with prudent investing, while seeking preservation of capital. Under normal market conditions, the fund invests primarily in investment-grade debt instruments. The fund focuses on government and corporate debt securities and mortgage- and asset-backed securities, floating rate corporate loans and municipal securities, targeting an estimated average portfolio duration of three (3) years or less.

Investment Process

Research Driven

  • Conduct independent fundamental analysis
  • Utilize proprietary quantitative models
  • Examine global macroeconomic and sector-specific factors

Disciplined

  • Adhere to long-term strategy through changing market environments
  • Strategically and actively allocate resources to expand opportunity sets for integration into strategy

Risk Focused

  • Seek to reduce investment risk by integrating risk management tools and techniques at the portfolio construction level

Rating

Overall Morningstar Rating As of 10/31/2019

Rating Category: Short-Term Bond

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
2 Stars
491
5
2 Stars
439
10
3 Stars
277

Morningstar Style Box As of09/30/2019

Strategy, Benefits, Results

Strategy

  • We target an estimated average portfolio duration of three years or less.
  • We invest across multiple investment-grade debt sectors, including government and corporate debt securities, and mortgage- and asset-backed securities.
  • Some of our investments may include securities issued by government-sponsored entities, such as Fannie Mae and Freddie Mac.i

Benefits

  • Low Duration. The fund's low average duration, targeted at three years or less, may potentially make the fund less sensitive to interest rate changes than funds with higher average durations.
  • Sector Diversification. We have the flexibility to allocate investments across multiple fixed-income sectors to maximize income and capital appreciation potential.
  • High Credit Quality. We invest primarily in investment-grade debt.
  • Investment Expertise. With access to research resources of the Franklin Templeton Fixed Income Group® and the perspective provided by Franklin equity research analysts, our combined "top-down" macroeconomic and "bottom-up" fundamental analysis helps identify bonds with the best prospects for income and capital appreciation.

Selling The Fund

  1. Highlight the fund's adherence to stringent risk-management disciplines.
  2. Mention the fund's flexibility to invest across multiple sectors, including government and corporate-debt securities, mortgage- and asset-backed securities and also U.S. government-sponsored entities.
  3. Discuss how low-duration bonds have historically been less volatile than higher duration bonds, providing for the potential of less fluctuation in principal.