Franklin Equity Income AFISEX

Morningstar Rating

Fund Research and Analysis

by Greg Brown

Franklin Equity Income's strategy shift has been working well during the volatile markets of late.

In 2008, comanagers Alan Muschott and Ed Perks tweaked this fund's strategy to include more bonds, preferred stock, and convertibles. This move takes advantage of management's strengths. Read more

Kudos

This fund has a history of below-average volatility.

Its focus on dividends should come in handy now that Uncle Sam has reduced the tax on equity payouts.

Hefty yield.

Low expense ratio. Read more

Risks

Its income-paying stocks generally lag during stock-market rallies. Read more

Strategy

This fund is chock-full of high-yielding stocks. Management looks for stocks with relatively high dividend yields and a history of increasing dividends. It will invest from time to time in below-average-yielding stocks--and in certain circumstances will even buy stocks that don't currently pay a dividend. Read more

Management

Alan Muschott and Ed Perks took over this fund in 2005. Frank Felicelli, who has been here from the fund's beginning in 1988, remains but in a reduced role. Muschott has been with the firm since 1998 and has managed Franklin Convertible Securities with considerable success since 2002. Read more

Inside Scoop

This fund takes the income part of its mandate seriously. It mostly buys stocks with above-average yields with a goal of delivering an above-market-average yield. It will entertain stocks with below-average yields if they have the wherewithal to increase their dividends in the future. Read more

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