Franklin Income Fund

Scorecard
5 / 5 Stars
Lipper
---
Zacks Investment Research
---
Standard & Poor's
2 / 5 Stars
TheStreet.com
C (Hold)

U.S. News evaluated 190 Conservative Allocation Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

See all Franklin Templeton Investments funds

See full Conservative Allocation rankings

See more fund rankings

Note: Profile written for different share class.

Performance

The fund has returned 14.65 percent over the past year, 9.55 percent over the past three years, 18.47 percent over the past five years, and 7.50 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 3.0%
1 Year 14.6%
3 Years (Annualized) 9.6%
5 Years (Annualized) 18.5%
10 Years (Annualized) 7.5%

See more FNCFX performance

Summary

Franklin Income's management team has found that sticking to its guns (and its value-oriented investment strategy) has paid off, and that's helped the fund weather bear markets. But trepid investors should be aware that this large-cap value can be a risky portfolio pick due to its investments in high-yield bonds.

As of March 05, 2014, the fund has assets totaling $85.77 billion. Its portfolio consists primarily of a large variety of bonds from the U.S. and abroad, including riskier low-rated corporate bonds.

Fear that swept the corporate bond market in 2008 took a particular toll on holdings in the struggling auto, banking, and pharmaceutical industries, spots where income-minded managers like Charles Johnson and Edward Perks look for securities with the potential to provide sizeable yields. The fund has rebounded in part due to its large holdings in high-yield bonds. Managers look for a mix of dividend-paying stocks like Merck and Exxon Mobil to make up about 30 percent of the portfolio. The rest of the portfolio contains a fairly large helping of lower quality bonds that produce high yields but also increase the volatility of the fund. More than 90 percent of the portfolio's fixed-income holdings were rated below investment grade as of the end of May. The fund has returned 14.65 percent over the past year and 9.55 percent over the past three years.

Aside from losses in 2008, the fund has posted positive returns consecutively since 2003, according to Morningstar. The fund has returned 18.47 percent over the past five years and 7.50 percent over the past decade.

Investment Strategy

The fund's management takes a contrarian approach to investing, selecting undervalued or out-of-favor blue chip stocks and utility bonds that managers believe offer opportunities for high current income and long-term capital growth. Investments include a variety of debt, such as junk bonds as well as corporate, foreign, and U.S. Treasury bonds, with high dividend yields. The fund tilts heavily toward less-than-sterling bonds, with the majority rated "BBB" or below.

Role in Portfolio

Morningstar calls the fund a “supporting player” within a portfolio, saying, “This fund's unique mix of utility stocks and high-yield bonds makes it more of a supporting player than a core offering. It probably should be paired with a growth-oriented fund.”

Management

Johnson, the chairman and director of Franklin Resources Inc., is a veteran of the company, having joined Franklin Templeton Investments in 1957. Perks has been a portfolio manager since 2002 and is a senior vice president and director of Core/Hybrid Portfolio Management for Franklin Global Advisers. Perks has the primary responsibility for the investments of the fund and makes final decisions over all aspects of the fund's investment portfolio, including the sales and purchases of securities, risk assessment, and the management of daily cash balances.

Fees

Franklin Income Fund has an expense ratio of 0.39 percent.

See more FNCFX fees

Risk

The fund notes its portfolio "includes a substantial portion of higher-yielding, lower-rated corporate bonds because of the relatively higher yields they offer. These securities carry a greater degree of credit risk relative to investment-grade securities."

See more FNCFX risk

Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-03-12

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 4 for one year, 3 for five years, and 2 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-03-12

The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-03-12

In the annual Lipper/Barron's Fund Families Survey for 2009, Franklin Templeton Investments ranks 17th out of 61 fund families.

Lipper

Morningstar gives the fund a stewardship rating of C on a scale of A to F, saying, “This fund is supported by an above-average corporate culture, benefiting from the firm's extensive analyst staff and overall philosophy of prudence and patience. Although the firm gets solid marks in most places, we wish it were governed by a board of directors with an independent chairman.”

Morningstar 2010-02-17

In the annual Lipper/Barron's Fund Families Survey for 2009, Franklin Templeton Investments ranks 17th out of 61 fund families.

Lipper

Morningstar gives the fund a stewardship rating of C on a scale of A to F, saying, “This fund is supported by an above-average corporate culture, benefiting from the firm's extensive analyst staff and overall philosophy of prudence and patience. Although the firm gets solid marks in most places, we wish it were governed by a board of directors with an independent chairman.”

Morningstar 2010-02-17

See Also:

Top Franklin Templeton Investments Funds

Conservative Allocations

Highest Returns (10-year)

See More Funds