The Franklin Income Fund Class A ("FKINX") strives to maximize income while holding prospects for long-term capital appreciation. Because there are no set proportions on its asset allocations, the fund is actively managed to capitalize on current market conditions. It invests in undervalued assets using a value-oriented approach. As of Feb. 29, 2016, total fund assets exceed $72.4 billion. Its expense ratio is 0.61%.
Just under 47% of the fund's total assets are invested in equity, while 36.34% are invested in fixed income. Most of the bond holdings, specifically 89.08%, are rated below investment grade. The largest equity holdings are in Royal Dutch Shell PLC (NYSE: RDS.B) with 2.53% of total equity investments, Pfizer Inc. (NYSE: PFE) with 1.9% and Roche Holding AG (OTC: RHHBY) with 1.79%. Just under 2% of all bonds are held in JPMorgan Chase & Co. (NYSE: JPM). Without the sales charge, the Franklin Income Fund has returned a loss over the previous year of 7.81%. The fund's three-, five- and 10-year average returns are 3.12, 5.09 and 5.47%, respectively.
First Quarter: January through March
January is the only month in the past five years to have returned a loss in three consecutive years. Meanwhile, the Franklin Income Fund has only reported a loss once in February and once in March during the past six years. These losses occurred in 2013, when the fund lost 0.9%, and in 2015, when it lost 2.4%. February 2015 and February 2014 returned gains of 3.4 and 3.8%, respectively, two of the three highest returns for any given month over the past five years. The fund had a non-negative return every March from 2009 to 2014, a streak of six consecutive years that has only occurred two other times in the past 10 years of the fund's history.
Second Quarter: April through June
Although the second quarter yields the Franklin Income Fund's best month, the fund doesn't always come out ahead. The 10-year average return during the month of April is an increase in net asset value (NAV) of 2.4%, the highest of any month. The fund lost 0.5% in April 2012, which was the month's only loss in the past 11 years. However, both May and June have reported 10-year average losses of 0.7 and 0.9%, respectively. The fund gained 0.4% in May 2014, which was the only gain experienced during this month in the past six years. Similarly, the fund enjoyed a gain only twice in the past six years. In five of the past six years, it had exactly two losses and one gain in each second quarter. The exception occurred in 2014, when it reported three consecutive gains.
Third Quarter: July through September
The Franklin Income Fund has not historically reported strong results in the third quarter. The net 10-year average across July, August and September was a loss of 1.7%. Although there were the same number of months with a gain as those with a loss over the past eight Septembers, the losses were simply larger. The smallest loss over the past eight years in the month of September was a decline of 3.5% in 2014, while the largest gain over the same period was 3.4% back in 2010. The fund's largest loss over the past 10 years occurred in September 2008, when it dropped 13.9%. The fund had a loss in each third-quarter month in 2008, 2011 and 2015. The first quarter of 2008 was the only other time three consecutive months in one quarter reported a loss.
Fourth Quarter: October through December
Two of the Franklin Income Fund's three largest gains over the past 10 years occurred in October. The fund's second-largest loss occurred in October, as well. In November, the fund only reported one gain greater than 0.1% once in the past eight years; this occurred back in 2009. While November's 10-year average return was the fund's lowest at a loss of 1.6%, December returned the second-highest average return with an average of 0.8%. Although the fund enjoyed gains of at least 1.3% in December from 2008 to 2013, it has since returned a loss of at least 2% over the past two years.
FKINX - Managers
Edward D. Perks
Edward Perks, CFA, executive vice president is chief investment officer of Franklin Templeton's equity teams, overseeing Franklin Equity Group, Templeton Global Equity Group, Franklin Mutual Series and Franklin U.S. Value. He is also a member of Franklin Resources' executive committee, a nine-member group responsible for shaping the company's overall strategy. Mr. Perks is lead portfolio manager for Franklin U.S. Monthly Income Fund, U.S.-based Franklin Income Fund and related portfolios. Mr. Perks holds a B.A. in economics and political science from Yale University.
Matthew D. Quinlan
Matt Quinlan, MBA is a vice president, research analyst and portfolio manager for the Franklin Equity Group. He is a portfolio manager for Franklin U.S. Monthly Income Fund and several U.S.-based Franklin equity funds. Mr. Quinlan leads the Consumer Research Team and he has research coverage responsibilities for the retail and consumer products sectors. He also analyzes debt and equity investments for the Core/Hybrid Team. Mr. Quinlan holds a B.A. in history from UCLA and an M.B.A. in finance and strategy from The Anderson School at UCLA.
Todd Brighton, CFA is a vice president, portfolio manager and research analyst for Franklin Equity Group. In addition to Franklin U.S. Monthly Income Fund he is a portfolio manager for U.S.-based Franklin Liberty U.S. Low Volatility ETF, Franklin Equity Income Fund and FTVIP Growth and Income Fund. Mr. Brighton analyzes equity and equity-linked investments for the Core/Hybrid team and specializes in the development of volatility-based strategies.
Richard S. Hsu
Richard Hsu, CFA is a vice president, portfolio manager, and research analyst in the Franklin Templeton Fixed Income Group. He is also a member of the firm’s Fixed Income Policy Committee. Mr. Hsu assists in the managing of bank loan credit strategies and research for the Franklin Income strategy and other corporate credit products that have allocations to floating rate debt. Mr. Hsu joined the firm in 1996 and helped create the floating rate bank loan group in 1997. He earned a B.A. with honors and M.A. from Stanford University.