This fund paid a supplemental income distribution of $0.0268 per share on 12/31/19, in addition to its regular monthly distribution. This supplemental distribution was paid to meet the distribution requirements for regulated investment companies and is anticipated to be considered a dividend for tax purposes. Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. If you have any questions, please contact your financial professional or Shareholder Services.
Beginning on 10/19/18, Class C shares held for 10 years or more will automatically convert to Class A shares. Thereafter, Class C shares held for 10 years or more will automatically convert to Class A shares on a monthly basis. This conversion allows shareholders to take advantage of the lower expenses offered by Class A shares. Please see the prospectus supplement for more information. If you have any questions, please contact your financial professional or call Franklin Templeton.
Effective 9/10/18, certain sales charges and commissions paid to dealers on Class A and A1 shares of our mutual funds changed. Please see the prospectus supplement for more information. If you have additional questions, please contact your financial professional or call Franklin Templeton.
The fund seeks to provide a high level of current income consistent with prudent investing, while seeking preservation of capital. The fund primarily invests in debt securities, which may be represented by derivatives that provide exposure to debt securities. The fund focuses on government and corporate debt securities and mortgage- and asset-backed securities. The fund targets an estimated average portfolio duration of three years or less.
Franklin Templeton Fixed Income believes that integrating top-down macroeconomic views, bottom up fundamental research, and quantitative science provides us with a competitive edge to navigate challenging investment environments, pursue consistent alpha, and better serve our clients.
Our investment process marries independently-derived macroeconomic and fundamental sector-specific research with quantitative insights.
The Quarterly Research and Strategy Forum is the starting point for our investment process. Investment teams present and debate independently derived macro, fundamental, and quantitative research, establishing key investment themes.
Individual sector teams dedicated to global sovereigns, corporate credit, securitized debt, and municipal bonds are responsible for preparing and presenting independent research which culminates in a fundamentals-driven outlook and recommendation for their sectors.
Our proprietary model provides unbiased forecast of spreads in each sector. Applying economic forecasts and machine learning, the model maps this forecast to an historic economic regime/environment considering how spreads in different sectors have behaved.
We perform a reconciliation between the macro views, quantitative input, fundamental views, and cross sector considerations to arrive at high conviction spread forecasts across all sectors.
Comparing expected spreads with prevailing market spreads identifies which sectors look expensive relative to our forecast ‘fair value’ and which sectors have more promising relative value and expected return.
The goal of this process is to provide the investment team with a high conviction view of expected spreads, to aid in the portfolio optimizing process.
We use a sophisticated portfolio optimization in our aim to maximize expected excess return for a given level of risk. Sector allocation, coupled with our top-down macro views, drive the final allocations for each strategy.
We conduct a ‘neighborhood analysis’ to determine optimal allocation bands. This process seeks to ensure that risk is efficiently allocated to our highest conviction views in a way that is consistent, repeatable, and designed for accountability.
Each sector allocation is then populated with the highest conviction securities of each sector team. This process brings together factor-based quantitative security rankings and active fundamental credit recommendations into prioritized, potential buy and sell lists at the security level.
Material environmental, social, and governance (ESG) issues are an integral component of our bottom-up research and risk/return forecasts. Analysts have access to multiple ESG data sources to help build a qualitative view of each issuer and security.
Throughout the portfolio construction process, portfolio managers collaborate with our independent Investment Risk Management Group, using a mosaic of risk metrics, to monitor and evaluate the level and sources of risk in each portfolio, and to ensure the allocation of risk is commensurate with the forward-looking views of the investment team, level of conviction, and the portfolio’s investment objectives and guidelines.
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Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. Investment return and principal value will fluctuate with market conditions, and you may have a gain or loss when you sell your shares.