Franklin Templeton Investments has unveiled a new income fund for investors looking for higher yields than a money market fund and seek less volatility than short-term bond funds.
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The new fund, dubbed as Franklin California Ultra-Short Tax-Free Income Fund, will provide a high a level of income exempt from federal income taxes and California personal income taxes as is consistent with prudent investment management and the preservation of shareholder capital.
The company said that the fund’s management team will look for investments across a large number of municipal securities that finance different types of projects.
The fund will maintain a dollar-weighted average portfolio maturity of one year or less and will invest mainly in investment grade securities or comparable unrated or short-term rated securities.
It will choose securities that will provide the best balance between risk and return within the fund’s range of allowable investments and typically use a buy and hold strategy.
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By GlobalDataThe Income Fund will hold securities in the portfolio for income purposes, rather than trading securities for capital gains.
As of 31 December 2015, Franklin managed over $18bn in California municipal bond fund assets and $73bn in municipal bond fund assets nationwide
Franklin Templeton Fixed Income Group municipal bond department vice president and portfolio manager and the fund’s co-lead manager Chris Sperry said: "We expect the fund to be attractive to investors who are concerned about rising interest rates, as the fund’s low duration positions it for less sensitivity to rate changes.
"The fund will provide investors with another option along the yield curve to complement our intermediate, longer-term and high yield California tax-free funds."
