The language of personal finance isn’t especially racy, but “debt” certainly has taken on the negative tone of other “four-letter words.” Even so, with college costs on the rise and many parents feeling especially pinched in this challenging economic environment, student loans – rather than college savings – have become the solution for many.
Loans come with the price of that aforementioned dirty word, so parents able to squeeze a few dollars into college savings plans while their children are young can dramatically lighten the load. More grandparents are also stepping in to help fund their grandchildren’s future education needs, perhaps without even realizing that they can potentially receive tax advantages in addition to giving the gift of a debt-free education.
In honor of the upcoming “529 Day,” the May 29th celebration of the 529 college savings plan, Beyond Bulls & Bears tapped College Savings Foundation Chairman Roger Michaud to talk about college savings solutions for today’s families.
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Whether it’s called “austerity” or “sequestration,” tightening belts is no fun for anyone. There’s pretty much universal agreement that sequestration – the stern term given to the US government spending cuts already stinging the country’s citizens in the form of airport delays, work furloughs, and reductions in social welfare programs – isn’t ideal, but the big question is whether these cutbacks will poison the still-tenuous US economic recovery.
Depending on your point of view, sequestration is either a very big deal, not a big deal, or not yet a big deal. Ed Perks, Portfolio Manager for Franklin Income Fund and Franklin Balanced Fund, believes the spending cuts now underway and looming ahead certainly could act as a drag on the US economy, but not inevitably drag it into a recession. Read more…
Yield-seeking investors have been boxed in by the near-zero US rate environment, and it seems like there are few ways out. But for those willing to set aside preconceived ideas about the word “leverage,” the lesser-known leveraged loans category may be an alternative to consider in the credit space. Mark Boyadjian, senior vice president and director of our Franklin Floating Rate Debt Group, spoke to us recently about what these often-misunderstood vehicles are and what yield-seeking investors need to know before they take the plunge. Read more…
After the calendar flipped to 2013, a bit of March madness took hold in the municipal bond market, as a headline frenzy hit and demand turned negative. Rafael Costas, senior vice president and co-director of our municipal bond department, has seen these seasonal ebbs and flows in the market before, and knows when sensational news headlines are more bark than bite. Could March really be the start of a “great rotation” out of fixed income in general? Are some of the headline-makers–including Stockton, Puerto Rico and Detroit–really reflective of the overall muni market? As Costas says, “there’s more hair to the story.” Read more…
Is it time to take stock in the U.S. market? Equities started the year strong as the U.S. economy sidestepped the worst-case fiscal cliff scenario and continued showing signs of improvement despite global economic uncertainty. In fact, the Dow Jones Industrial Average reached a record high in early March. While there are still a number of possible issues that threaten to derail the market (particularly related to government spending and debt), Grant Bowers, portfolio manager of Franklin Growth Opportunities Fund, believes economic resilience in the United States is encouraging news for stocks, and investors have taken notice. Read more…
As New Year’s resolutions fade into guilty memories, it’s a bitter reminder that maintaining discipline, in life and investing, is just plain hard. Despite best intentions, bear markets can tempt investors to sell everything, while bull markets can whip people into a buying frenzy, both courses of action that rarely end happily.
If Conrad Herrmann, who manages Franklin Flex Cap Growth Fund, is susceptible to market temptations, he certainly doesn’t show it. He strictly adheres to three dimensions along which all potential investment opportunities are judged: growth, quality and valuation.
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The one thing the U.S. government seems particularly good at is procrastination. The “sequestration” deadline on March 1 has come and gone, and no real plan has yet emerged to stop an automatic roster of federal budget cuts that, if left in place, will ripple through many sectors of the economy for years to come. While the While House estimated the cuts could equal $85 billion in fiscal 2013 alone, the markets seem to be taking them more or less in stride. Are we just getting used to Washington’s gridlock, or is there reason to be optimistic?
Ed Jamieson, Chief Investment Officer of Franklin Equity Group®, offers his quick take on the situation.
Ed Jamieson
“Overall we are not that concerned about the sequester as it relates to the financial markets. From the research we’ve seen, if left in place, the sequester could provide a drag on the economy of about half a percent throughout the rest of the year. Economic growth is slow in the U.S. right now, but there are a number of positive factors that should help offset the automatic spending cuts. Housing in particular has been a drag for a number of years and by all metrics seems to be heating up. If that continues, economic growth due to a rebound in housing could by itself offset the negative effects of sequestration. Longer-term the boom in natural gas and oil production should lead to continued growth in manufacturing this year and beyond. In our view, there is enough momentum in these and other areas of the economy to help offset the effects of sequestration, and we expect the economy to continue to grind slowly higher. The markets themselves seem to suggest the economy can grow through sequestration.”
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While governments worldwide continue to struggle with debt and budget issues, for the most part, corporations have turned lemons into lemonade and have become lean and mean. While not without risk, corporate credit actually looks to be in fairly good shape, according to Eric Takaha who, as senior vice president and portfolio manager of Franklin Strategic Income Fund spends a good deal of time analyzing the space. Read more…
One would hope that after the United States avoided going over the fiscal cliff there might be some calm in the financial markets, but the forecast still calls for potential choppiness ahead with a good chance of uncertainty because there are fiscal loose ends that still need to be tied up. Congress and the Obama administration have addressed the tax side of the equation, but delayed making the tough decisions on the spending side which are also needed if they are to have a fighting chance at tackling the nation’s mounting deficit. And of course, the U.S. still hasn’t closed the debate on the debt ceiling, which could result in another market storm. Read more…
We wrap up our 2013 Vantage Points series with three Franklin Equity Group© portfolio managers who offer their insights on the natural resources sector: Frederick Fromm, CFA, portfolio manager and senior security analyst; Steve Land, CFA, portfolio manager and research analyst, and Matthew Adams, CFA, portfolio manager and research analyst.
FRANKLIN EQUITY GROUP®
Frederick Fromm, CFA, Portfolio Manager and Senior Security Analyst
Steve Land, CFA, Portfolio Manager and Research Analyst
Matthew Adams, CFA, Portfolio Manager and Research Analyst
The environment in 2012 was rife with economic and political cross-currents that can divert investors’ attention away from long-term goals and investment strategies. During times like these, we believe it is important to refocus on what can make natural resources attractive as an asset class. Global consumption increases driven by a combination of world population growth and per-capita consumption trends are likely to continue, in our view, driving demand for commodities longer term. However, over time, we believe it is inevitable that we are likely to experience periods of slowing economic expansion and consumption growth, which should not be mistaken for a long-term shift. Large portions of the world’s population still consume far less than those living in the developed world, and it is likely they will continue to aspire to higher standards of living, in our view. As consumption grows, we believe certain commodities are likely to face supply constraints and robust pricing dynamics, and though fundamental supply and demand trends could shift over time, we expect many companies could benefit from the potentially robust fundamental environments. Read more…
