Is Your Income Portfolio
Sufficiently Diversified?
High Yield Bonds
6.5
3%
5.5
7%
EM Government Bonds
6.5
9%
Floating Rate Loans
4.6
2%
Income Securities
5.6
4%
Preferred Shares
3.3
0%
Convertible Securities
2.7
1%
Global Corporate Bonds
2.8
5%
US MBS
2.4
0%
Maple Bonds
2.5
8%
US Corporate Bonds
1.6
0%
Sovereign Bonds
US Government Bonds
1.6
8%
0.8
5%
Global Government Bonds
2.6
8%
Cdn Corporate Bonds
Prov Government Bonds
2.5
0%
1.4
1%
5-Year GICs
Cdn Government Bonds
1.3
9%
LIMITING YOUR INCOME INVESTMENTS TO DOMESTIC GICS AND BONDS CAN ALSO LIMIT INCOME OPPORTUNITIES
Sources: Morningstar Research Inc., Barclays Capital, Credit Suisse, BoAML, JP Morgan, PC Bond Research, Citi Group, as of December 31, 2016. Based on the current yield of the underlying index.
IN AN UNCERTAIN RATE ENVIRONMENT, FIXED INCOME PORTFOLIOS NEED DIVERSITY AND ACTIVE MANAGEMENT
Average return (%) during periods of falling interest rates
Average return (%) during periods of rising interest rates
Canadian Long-Terms Bonds
US Government Bonds
Canadian Government Bonds
Sovereigns
Canadian Bond Universe
US Long-Terms Bonds
G7 Sovereign Bonds
US Investment-Grade Corporate Bonds
Canadian Corporate Bonds
US Mortgage-Backed Securities
US Municipal Bonds
Canadian Short-Term Bonds
Canadian Pro & Municipal Bonds
US Treasury Inflation Protected Notes
US Short-Term Bonds
High Yield Bonds
EM Sovereign Debt
US Treasury Bills
Bank Loans
Bank Loans
High Yield Bonds
EM Sovereign Debt
Canadian Corporate Bonds
Sovereigns
Canadian Short-Term Bonds
US Short-Term Bonds
US Treasury Bills
US Investment-Grade Corporate Bonds
US Mortgage-Backed Securities
US Treasury Inflation Protected Notes
US Municipal Bonds
Canadian Bond Universe
Canadian Prov & Municipal Bonds
Canadian Government Bonds
US Long-Term Bonds
US Government Bonds
G7 Sovereign Bonds
Canadian Long-Term Bonds
O
5
10
15
O
20
5
10
15
20
Source: Morningstar Research Inc., Bloomberg. All returns are based on indices’ base currency. Periods of rising/falling interest rates are defined as calendar years when rates on the 10-year US Treasury
rose/fell more than 100 basis points for the period from January 1986 to December 2016. Average returns for each asset class only include the years where data is available. See reverse for index definitions.
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*Franklin Templeton Investment Funds (FTIF) are Luxembourg SICAVs and are not available for direct purchase in Canada.
Société d’Investissement à Capital Variable (SICAV) is an open-end investment company governed by the laws of Luxembourg.
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Franklin Quotential Portfolios draw from over 80 unique
strategies. The Portfolios are structured for broad exposure
to each asset class and can include Canadian mutual funds,
sub-advised funds, Luxembourg-based SICAVs* and ETFs
for targeted allocation exposure. The result is true
diversification with minimal investment duplication.
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The Franklin Quotential®
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Is Your Income Portfolio Sufficiently Diversified?
Get the Benefits of Franklin Quotential Diversified Income Portfolio–T
BETTER CASH FLOW THAN GICS AND BONDS1
Distribution Rate/Yield (%)
6
4.98%
4.95%
5.00%
4.97%
5.12%
4
2
0
2013
2012
Diversified Income Portfolio–T
2014
5-Year GICs
Federal Bonds
2015
Provincial Bonds
2016
Corporate Bonds
Sources: Franklin Templeton Investments, PC Bond Research, Morningstar Research, as of December 31, 2016. Annual distribution rate of Franklin Quotential Diversified Income Portfolio–T; Morningstar
5-year GIC average (5-year GICs); FTSE TMX Canada Federal Bond Index (federal bonds); FTSE TMX Canada Provincial Bond Index (provincial bonds); FTSE TMX Canada Corporate Bond Index (corporate bonds).
67% MORE, THANKS TO TAX-EFFICIENT DISTRIBUTIONS2
SOLID PERFORMANCE
Payout ($)
Annual Compounded Returns (%)
1000
1000 (Gross)
You Keep
897
1000 (Gross)
8
800
You Keep
536
600
400
6
6.73
4
After Tax
After Tax
Income from Diversified
Income Portfolio–T
Income from bond or GIC
5.84
5.11
4.88
4.49
3.16
3.92 3.99
5.01 4.72
2
200
0
0
Return of Capital
Canadian Eligible Dividends
Interest
1 Year
3 Years
5 Years
10 Years
Since Inception
02/17/03
Category Average*
Diversified Income Portfolio–T
Source: Morningstar Research Inc., as of March 31, 2017.
*Morningstar Canada Global Fixed Income Balanced
Call your investment advisor or visit www.franklintempleton.ca/diversifiedincome
Index definitions: emerging markets sovereign debt, BrCp Emerging Market TR US$; US municipal bonds, BrCp Municipal TR US$; US corp. bonds, BrCp US Credit TR US$; US government bonds, BrCp US gov.
bonds TR US$; US mortgage-backed securities, BrCp US Mortgage-Backed TR US$; US treasury inflation protected securities (TIPS), BrCp US Treasury US TIPS TR US$; sovereign bonds, Citi World Gov.t Bond
Index US$; high yield bonds, CS High Yield US$; bank loans, CS Leveraged Loan US$; Cdn bonds, FTSE TMX Canada Universe Bond Index; US treasury bills, BrCp US Treasury Bills TR US$; G7 sovereign bonds,
BrCp Global G7 TR US$; Cdn copr. bonds, FTSE TMX Canada Corporate Bond Index; Cdn prov. & muni.l bonds, BoA Merrill Lynch Cdn Prov. & Muni. Bond Index; Cdn income equities, S&P/TSX Equity Income TRI;
US preferred shares BoAML US Preferred Stock Fixed Rate Index.
1. Cashflows include 12-month trailing distribution rate of Franklin Quotential Diversified Income Portfolio–T (FQDIP–T); yields of Morningstar 5-year GIC avg. FTSE TMX Canada Federal Bond Index and
FTSE TMX Canada Corporate Bond Index. FQDIP–T pays monthly distributions that include tax-deferred return of capital (ROC) which can be customized up to a maximum target rate of 5%; the remainder will be
reinvested in additional Series T units of the Portfolio. Maximum rate of distribution may change at the discretion of Franklin Templeton Investments Corp. Any year-end distributions consisting of income and capital
gains must be reinvested and are taxable in the year they are received. On June 23, 2008, FQDIP Series A was converted to series T with a monthly return of capital distribution. The 2008 distribution consists
of income received by investors from January 2008–June 2008 and ROC thereafter. The payment of income distributions is not guaranteed and may fluctuate. Income distributions and ROC payments are not
an indication of performance, rate of return, or yield. If distributions paid by a fund are greater than the return of the fund, the value of the investor’s investment will decrease. An investor’s adjusted cost
base (ACB) will be reduced by the amount of the ROC payments. If the investment’s ACB goes below zero, the investor will have to pay capital gains tax on any further ROC distributions. Unrealized capital
gain is calculated as (Market Value – ACB). Negative ACB on the Series T investment is recognized as a capital gain in the year it is received.
2. Calculations based on FQDIP–T distributions paid over 2016 calendar year. Assume marginal tax rate of 46.41% (Ontario in 2016) and effective rate of 29.52% for Cdn eligible dividends. The indicated
rates of return are historical annual compounded total returns including changes in share/unit value and reinvestment of all dividends/distributions and do not take into account sales, redemption, distribution
or optional charges or income taxes payable by any security holder that would have reduced returns. Commissions, trailing commissions, management fees and expenses all may be associated with mutual
fund investments. Please read the prospectus or fund facts document before investing. The indicated rates of return are historical annual compounded total returns including changes in unit value and
reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual
funds are not guaranteed, their values change frequently and past performance may not be repeated. Important data provider notices and terms available at www.franklintempletondatasources.com.
Franklin Quotential® is a registered trademark owned by Franklin Templeton Investments Corp.
Franklin Templeton Investments Corp.
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