Franklin California Ultra-Short Tax-Free Income Fund

This fund or share class has been liquidated or reorganized.

This fund or share class has been liquidated or reorganized.


Investment Philosophy

Focus on Income

Franklin municipal managers aim to maximize monthly tax-free income for shareholders. Historically, the income return from municipal bonds has contributed much more to municipal bond returns than changes in municipal bond prices. Additionally, Franklin managers generally limit fund exposure to bonds with income that is subject to the Alternative Minimum Tax.

No Leverage, No Derivatives, No Options

Franklin managers avoid investment practices that may expose shareholder capital to unnecessary risk. For example, we don’t use leverage or invest in derivatives or futures, because they can increase portfolio volatility.

Strict Internal Analysis

Our analysts are responsible for conducting research on credit-driven securities in the municipal market. They are responsible for evaluating an issuer’s credit strengths and weaknesses and working with the portfolio managers on select fund purchase and sale decisions.

Investment Process

Market AnalysisResearchPortfolio Construction
On a daily basis, we analyze current market conditions, including:
  • Trading activity
  • Yield spreads
  • Call option spreads
  • New offerings
  • Secondary market offerings
  • Credit ratings
  • Event risk
We search for high-quality, undervalued bonds that we believe should provide a high level of income until maturity.
We often make site visits to identify potential problems and opportunities that may not be readily visible on paper.
Analysts focus on credit-driven bond issues where we believe they can add the most value to the security selection process.
We build portfolios with diversification in mind, taking into consideration allocations to sectors, regions, coupons, calls, maturities and quality, as appropriate.
We don’t make significant allocation shifts based on expected market conditions. Rather, we look for the best value in the marketplace from an income-oriented perspective.