Franklin Federal Tax Free Income Fund

Scorecard
4 / 5 Stars
Lipper
4 4 3 4 5
Zacks Investment Research
2 (Buy)
Standard & Poor's
4 / 5 Stars
TheStreet.com
B+ (Buy)

#11 in Muni National Long

U.S. News evaluated 58 Muni National Long Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 6.53 percent over the past year, 6.07 percent over the past three years, 6.23 percent over the past five years, and 4.96 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 7.4%
1 Year 6.5%
3 Years (Annualized) 6.1%
5 Years (Annualized) 6.2%
10 Years (Annualized) 5.0%

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Summary

Management at Franklin Federal Tax-Free Income fund takes its long-term perspective seriously. The fund is known for its conservative strategy that has provided for consistent returns through investments in tax-free municipal bonds.

As of July 03, 2014, the fund has assets totaling $10.86 billion. Its portfolio consists of long-term, investment-grade holdings in municipal securities that are free from federal income tax.

"The fund's diversified portfolio of nearly 900 bonds has a wide range of maturities and geographic exposure, but it's generally concentrated in high-quality issues," says Morningstar. Known for its consistency, by the end of 2010 the fund had racked up a 7 percent annualized return since its 1983 inception. The fund has returned 6.53 percent over the past year and 6.07 percent over the past three years.

Management's long-term strategy is to hold on to bonds until they mature. "We follow a plain-vanilla strategy, focusing on buying the best relative value in the marketplace and holding bonds for the long term to collect tax-free income," says lead manager Shelia Amoroso. The average maturity of the fund's holdings is 19 years, and management avoids the use of leverage or derivatives. Instead, it favors a strict buy-and-hold strategy. The fund has returned 6.23 percent over the past five years and 4.96 percent over the past decade.

Investment Strategy

The fund invests 80 percent of its assets in investment-grade municipal securities that are free from federal income tax. Management buys only investment-grade bonds and has a strict buy-and-hold strategy, meaning "it holds securities in the fund's portfolio for income purposes rather than trading securities for capital gains."

Role in Portfolio

Morningstar assigns the fund a "core" role in portfolio.

Management

Shelia Amoroso, who has been with the fund since 1987, is the fund's lead manager. Comanagers Carrie Higgins and Francisco Rivera handle most of the day-to-day work, according to Morningstar.

Fees

Franklin Federal Tax Free Income Fund has an expense ratio of 0.61 percent.

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Risk

Since most of the fund's bonds are long-term holdings, they can be susceptible to interest-rate risk.

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Fund Opinions

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

Value Line 2014-06-11

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

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

Morningstar gives this fund a stewardship rating of B 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 fund gets solid marks in most places, we wish it were governed by a board of directors with an independent chairman.”

Morningstar 2011-01-04

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

2010-02-17

Morningstar gives this fund a stewardship rating of B 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 fund gets solid marks in most places, we wish it were governed by a board of directors with an independent chairman.”

Morningstar 2011-01-04

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

2010-02-17

See Also:

Top Franklin Templeton Investments Funds