In response to demand by investors looking abroad for higher income, Franklin Templeton has launched a global, income-oriented, balanced fund. The Templeton Income Fund will invest in fixed income and equities in the U.S. and overseas, using the company’s usual global, long-term, bottom-up stock and bond selection strategy. It is the first time that Templeton’s global equity group and Franklin Templeton’s fixed income group has managed a fund together. The new fund is designed with “flexibility to take advantage of dislocations in the markets,” when and where they occur, according to Christopher Molumphy, executive VP and CIO of the Franklin Templeton Fixed Income group.
The fixed income portion of the fund will search for yield in developed and emerging markets, in investment grade as well as sub-investment-grade securities including government, agency, and corporate debt. The equity portion will look for companies around the world that are currently paying high dividends or have the high free cash flow that indicates that it is likely to pay dividends in the near future. One reason that it is a good time to launch such a fund is that there has been a “geographic, secular change,” in which “countries outside of the U.S. are starting to pay dividends now,” says Jeffrey Everett, CIO for all retail portfolios in the Templeton Global Equity group.
Lisa Myers, VP and portfolio manager at Templeton, says she will look for undervalued companies with high free cash flow because “it’s likely free cash flow will come back as dividends.” Myers, the lead equity portfolio manager for the new fund, says the fund is geared for “aging investors looking toward retirement, looking for income.” She says, “return of that free cash flow to investors is what is so exciting to us,” about this fund.
The fund’s minimum initial investment is $1,000. The advisor class of the fund has no initial sales load, no 12b-1 fee, and a 0.95% expense ratio, while the retail class has a maximum initial sales load of 4.5%, 25 basis points in 12b-1 fees, and a 1.20% expense ratio.