Franklin US Floating Rate Bank Loans

The strategy seeks a high level of current income and, secondarily, preservation of capital, by investing predominantly in floating interest rate senior secured corporate loans (floating-rate loans) and corporate debt securities.

OVERVIEW

STRATEGY SUMMARY

  • Invests in a portfolio of diversified U.S. bank loans that seeks to provide high risk-adjusted returns through fundamental credit research and disciplined active management.
  • Managed primarily to pursue attractive levels of income while seeking to reduce default risk, and as such, do not explicitly seek price appreciation at the expense of high default exposure.
  • The strategy may be a strong candidate for investors looking to manage their portfolio risk in a rising rate environment and seeking additional diversification benefits by investing in an asset class that has exhibited lower correlations to other asset classes in both equity and fixed income.

BENCHMARK

  • Credit Suisse Leveraged Loan Split BB Index

COMPOSITE PROFILE

A multi-page overview highlighting the composite performance, portfolio characteristics, investment process, management team and commentary.

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We are extremely selective in choosing investments for the strategy. We prefer to buy loans from companies that have two means of repaying their debt--strong cash flows and significant collateral value with tangible assets.”

OUR APPROACH

Investment Philosophy

We believe that constructing diversified portfolios of predominantly senior secured floating rate debt instruments can provide the potential for high income while independent fundamental credit research and active portfolio management can help reduce levels of overall credit risk and principal value volatility.

Investment Process Summary

  • Fundamental analysis: dedicated, bottom-up credit research incorporating proprietary information.
  • Disciplined approach: focus on capital preservation by seeking higher quality issues within the asset class with strong asset coverage; avoid companies with high expected defaults or high expected losses in event of default; maintain diversified portfolios through a disciplined portfolio construction process; focus primarily on new-issue market where we believe the risk/return profiles are the most favorable; add selectively to existing positions through secondary market.
  • Risk management: integrate risk management in portfolio construction process by estimating expected frequency of default and expected loss in event of default, as well as total value at risk.


OUR TEAM

Hague Van Dillen

Hague Van Dillen
Portfolio Manager,
Franklin Templeton Fixed Income Group
With firm since: 2008

John Beck

Margaret Chiu, CFA
Portfolio Manager,
Franklin Templeton Fixed Income Group
With firm since: 2012

John Beck

Reema Agarwal, CFA
Senior Vice President, Director of Floating Rate Debt Group,
Franklin Templeton Fixed Income Group
With firm since: 2004