Fixed income funds invest mainly in debt securities such as bonds, debentures, mortgages and in other categories including preferred shares and derivatives. These securities are generally publicly traded on fixed income and other capital markets.
Investors expect their fixed income investments to:
Investing in fixed income funds has many advantages over owning individual bonds, they include:
Fixed income funds include global, regional (such as emerging market or developed market funds) or individual country portfolios. Within these geographical groupings, portfolios may contain one or more types of investments, including:
Sovereign
Government bonds are issued by national governments (also known as sovereign bonds) and their agencies. These bonds are typically of the highest quality and are considered low risk as they are backed by the government that issued them.
Municipal
Municipal bonds are issued by local governments and other public authorities. Similar to government bonds, municipal bonds are also considered low risk.
Corporate credit includes bonds, debentures and other types of fixed-income instruments issued by corporations in the private sector. While corporate bonds are further along the risk spectrum than government bonds, they offer potentially higher income.
Also known as asset-backed securities, securitized loans are backed by some form of collateral. Examples include residential and commercial mortgages, automobile loans and credit cards. These investments generate an income stream from the underlying assets that are passed on to the holders of the asset-backed securities.
Commercial banks underwrite loans to private corporations, including first lien, second lien, and collateralized loan obligations. Bank loans tend to be higher risk than corporate bonds and potentially offer higher interest rates.
To gain exposure to different currencies, these funds typically invest in money market instruments and forward currency contracts denominated in the local currencies of foreign countries.
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This ETF seeks to provide high current income and some long-term capital appreciation through exposure to Canadian fixed-income securities.
This fund combines Canadian core bonds with non-core fixed income opportunities to seek superior risk-adjusted returns and a consistent income stream.
Talk to your advisor or call our Client Services team at 1 (800) 387-0830 to learn more about fixed income funds and Franklin Templeton’s range of mutual funds and ETFs.
We believe that global fixed income markets are inefficient, and we exploit these inefficiencies through fundamental sector-by-sector research in collaboration with our regional teams. Our investment process marries independently derived macroeconomic and fundamental sector-specific research with quantitative insights.
With over 1451 dedicated fixed income professionals, 16 global and 12 regional fixed income offices located in the Americas, Europe, Middle East and the Asia Pacific, our portfolio management teams benefit from local expertise and investment opportunities from around the world and across multiple sectors.