Aiming at the highest exemption from federal income taxes
SAN MATEO, CA–(Marketwired – Mar 29, 2016) – Franklin Templeton Investments today announced the launch of Franklin California Ultra-Short Tax-Free Income Fund1 (“the fund”) (NASDAQ: FCUZX) for US investors, which aims to provide as 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 fund is designed for investors who desire higher yields than a money market fund and seek less volatility than short-term bond funds.
“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,” said the fund’s co-lead manager Chris Sperry, CFA2, vice president and portfolio manager for Franklin Templeton Fixed Income Group’s municipal bond department. “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.”
The fund’s management team will search for investments across a large number of municipal securities that finance different types of projects.
Fund managers will select securities they believe 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. The fund management team will maintain a dollar-weighted average portfolio maturity of one year or less and will invest predominantly in investment grade (at the time of purchase) securities or comparable unrated or short-term rated securities.
The fund generally will hold securities in the portfolio for income purposes, rather than trading securities for capital gains.
“The Franklin municipal bond team is committed to a conservative, disciplined strategy,” said the fund’s co-lead manager, John Bonelli, portfolio manager for Franklin Templeton Fixed Income Group’s municipal bond department. “For over 30 years, we’ve sought to provide our shareholders with tax-free income while preserving their principal. This new fund is a natural fit for us.”
Funds that invest in California
Franklin established the California municipal bond fund category in 1981 working with leaders in the California legislature to change the state tax law to allow mutual funds that invested in California municipal bonds to pass through the federal and state tax-free income to shareholders. As a result, Franklin California Tax-Free Income Fund was established in 1977. As of December 31, 2015 the firm manages more than $18 billion in California municipal bond fund assets and $73 billion in municipal bond fund assets nationwide.
Sperry, a 20-year industry veteran, co-manages several Franklin California municipal funds including Franklin California Tax-Free Income Fund, Franklin California High Yield Municipal Bond Fund and Franklin California Intermediate-Term Tax-Free Income Fund. Bonelli has six years of industry experience with short-term municipal bond expertise. The pair is backed by the support of 17 research analysts with Franklin Templeton Fixed Income Group’s municipal bond department who have an average of 19 years of experience as of December 31, 2015. The team is based in California, allowing for local insights on their state’s municipal market.
Important Information about the Fund
All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest rate movements, the fund’s yield and share price will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Because the fund invests principally in a single state, it is subject to greater risk of adverse economic and regulatory changes in that state than a geographically diversified fund.
Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN /(800)342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.
About Franklin Templeton Investments
Franklin Templeton has been managing fixed income assets since 1948 and dedicated fixed income mutual funds since 1970. During that time, it has become a global leader in fixed income investing with over $185 billion3 in fixed income assets under management. Franklin Templeton’s funds cover the entire fixed income spectrum, including government securities, municipal bonds, corporate bonds, floating-rate loans, global bonds and multi-sector strategies that capitalize on the company’s expertise in each of these areas.
The fund’s principal underwriter is Franklin Templeton Distributors, Inc., a wholly owned subsidiary of Franklin Resources, Inc. (NYSE: BEN), a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 180 countries. Through specialized teams, the company has expertise across all asset classes — including equity, fixed income, alternative and custom solutions. The company’s more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California-based company has more than 65 years of investment experience and over $728 billion in assets under management as of January 31, 2016. For more information, please visit franklintempleton.com.
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1. On 3/18/2016, Franklin California Tax-Exempt Money Fund reorganized into a new fund, Franklin California Ultra-Short Tax-Free Income Fund. Franklin California Ultra-Short Tax-Free Income Fund is not a money market fund and is not subject to the same portfolio credit quality, liquidity, maturity and diversification requirements as a money market fund. Based on reorganization, the longer track record for the Franklin California Tax-Exempt Money Fund will be utilized for performance track record of the new fund going forward.
2. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
3. As of January 31, 2016.