On the latest episode of ETF 360, VettaFi’s Kristen Chang spoke to Franklin Income Investors’ SVP and Portfolio Manager Todd Brighton. The two discussed the Franklin Income Focus ETF (INCM ) and the Franklin Income Equity Focus ETF (INCE ).
Looking at the Broader Equities Landscape
With the S&P 500 seeing two years of more than 20% returns, many wonder if there will be some reversion to the mean. “When we look at the S&P 500, clearly the expectations are quite high for the continued growth and execution of those megacap tech companies,” Brighton said, adding that “below that there really are opportunities.”
Megacap tech spills lots of ink, but Brighton sees opportunities in healthcare, industrials, and energy. “We saw quite a bit of a rotation in the market in the second half of 2024. As we move into 2025, we could continue to see that. You might see more muted returns at the index level, but still lots of opportunities for capital appreciation.”
INCM Is Franklin Templeton Doing What It Does Best
Brighton noted that credit markets are still trading quite tight and carry remains good. “Total returns in 2025 could be harder beyond that carry, just given where spreads are.” That said, he sees opportunities in certain areas that are more in line with historic averages.
INCM launched in June 2023, using Franklin Templeton’s history as a multi-asset income portfolio leader. “This is really leveraging a similar philosophy and process as that flagship $74 billion dollar mutual fund,” Brighton said.
INCE Taps Income in Equities
INCE uses an all-equity portfolio with a dividend yield around 5.5%. “When we really look at the equity markets, that’s 4%+ what we see in the S&P 500 today,” he added. “We think this offers a nice balance of income above traditional equity income funds while still maintaining meaningful capital appreciation potential.”
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