Average annual total returns and fund expenses (%) as of September 30, 2024
|
Without Sales Charge (% |
With Maximum Sales Charge (%) |
Expenses |
Sales Charges (%) |
Inception Date |
|||||||||||||||||
|
Class |
CUSIP |
Ticker |
3-Mo |
YTD |
1-Yr |
3-Yr |
5-Yr |
10-Yr |
Inception |
3-Mo |
YTD |
1-Yr |
3-Yr |
5-Yr |
10-Yr |
Inception |
Gross |
Net |
Max |
CDSC |
|
|
A |
354130809 |
MUTF:FNYQX |
2.50 |
2.95 |
11.40 |
-0.72 |
0.65 |
1.59 |
5.52 |
-1.34 |
-0.91 |
7.22 |
-1.98 |
-0.11 |
1.20 |
5.43 |
0.75 |
0.75 |
3.75 |
— |
9/13/1982 |
|
Advisor |
354130403 |
MUTF:FNYAX |
2.66 |
3.24 |
11.78 |
-0.44 |
0.92 |
1.80 |
5.62 |
2.66 |
3.24 |
11.78 |
-0.44 |
0.92 |
1.80 |
5.62 |
0.50 |
0.50 |
— |
— |
9/13/1982 |
|
BM |
2.58 |
2.06 |
10.88 |
0.22 |
1.35 |
2.42 |
— |
2.58 |
2.06 |
10.88 |
0.22 |
1.35 |
2.42 |
— |
|||||||
|
Benchmark |
Name |
|
BM |
Linked Bloomberg New York Muni Bond/Muni Bond Index |
|
Characteristics (Fixed Income) |
|
|
30-Day SEC yield w/ waiver-Advisor Class |
3.26 |
|
30-Day SEC yield w/o waiver-Advisor Class |
3.26 |
|
Effective Duration |
7.59 Years |
|
Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the figures shown. Principal value and investment returns will fluctuate, and investors’ shares, when redeemed, may be worth more or less than the original cost. Performance would have been lower if fees had not been waived in various periods. Total returns assume the reinvestment of all distributions and the deduction of all fund expenses. Returns with sales charge reflect a deduction of the stated maximum sales charge. An investor cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges. Returns for periods of less than one year are not annualized. All classes of shares may not be available to all investors or through all distribution channels. For current month-end performance, please visit www.franklintempleton.com. The fund began offering Advisor Class shares on 10/1/2001, and the fund began offering A Class shares on 9/10/2018. Performance quotations have been calculated as follows: (A) for Advisor Class periods prior to 10/1/2001, a restated figure is used based on the fund’s Class A1 performance; for A Class periods prior to 9/10/2018, a restated figure is used based on the fund’s Class A1 performance. The performance was adjusted to take into account differences in class-specific operating expenses and maximum sales charges. (B) For periods after share class offering, performance for the specific share class is used, reflecting the expenses and maximum sales charges applicable to that class. Gross expenses are the fund’s total annual operating expenses as of the fund’s prospectus available at the time of publication. Net expenses are capped under a contractual agreement, which cannot be terminated prior to 06/30/2025 without Board consent. Actual expenses may be higher and may impact portfolio returns. |
Key Takeaways
Markets: The municipal (muni) bond market, as measured by the Bloomberg Municipal Bond Index, recorded positive total returns for the third quarter of 2024, and the US Federal Reserve (Fed) launched its rate-cutting cycle. General obligation bonds outperformed revenue-related issues, while high-yield securities bettered investment grade-rated debt.
Contributors: Overweight to muni bonds with 20 or more years to maturity, overweight allocation to A rated issuers and selection in BBB rated bonds.
Detractors: Security selection among AA rated bonds, overweight to BBB rated issuers and underweight to bonds with five to 10 years to maturity.
Outlook: We remain moderately bullish on the sector, as still-elevated yields and healthy credit fundamentals should continue to draw investor interest. We believe there are opportunities to find value across the credit spectrum.
Performance review
Over the quarter, Franklin New York Tax-Free Income Fund outperformed its benchmark, the Linked Bloomberg Muni Bond New York Exempt/Muni Bond Index. Duration positioning boosted relative fund performance during the period. Yields declined across the muni curve, and therefore our overweight to bonds with 20 or more years to maturity helped returns. This was only somewhat offset by a modest underweight to muni bonds with five to 10 years to maturity, which hindered results. Rating allocations supported relative fund returns, primarily due to our overweight to A rated securities. In contrast, an overweight to BBB rated issues curbed performance. Security selection, particularly in AA rated issues, also detracted from results.
Outlook
Significant new tax-exempt muni bond issuance was met with positive fund inflows during the quarter. Going forward, we expect investors to continue to be drawn by the historically elevated yields on offerings, which can be particularly appealing for those investors who target tax-adjusted income. Over the coming months, declining yields (as the Fed eases monetary policy) should provide a tailwind for bond investors. A major catalyst that we are looking at for inflows to pick up more significantly is the return of the US Treasury yield curve to its typical, upward sloping shape. Fundamentals in the muni market remain stable and should be supportive of the asset class over the medium to long term. However, the credit environment is normalizing as some of the tailwinds that have been contributing to credit strength over recent years are waning. Nevertheless, large reserves should provide a comfortable buffer against any serious deterioration. We continue to see signs of a strong US economy. Against this backdrop, we were slightly surprised at the Fed’s outsized cut in September but agree with the dot plot’s forecast for two more 25-basis point cuts by year-end. Further out, we believe that the easing cycle should be more shallow than what is priced in by many market participants. This, in turn, can mean volatility in fixed income markets going forward. It is our view that these instances can potentially provide an attractive entry point into the tax-exempt muni bond sector. We believe there are opportunities to find value within the sector across the credit spectrum.
|
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE What should I know before investing? All investments involve risks, including possible loss of principal. Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Portfolios focused on a single state are subject to greater risk of adverse economic and regulatory changes in that state than a geographically diversified fund. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. An investor may be subject to the federal Alternative Minimum Tax, and state and local taxes may apply. These and other risks are discussed in the fund’s prospectus. Glossary The Federal Reserve Board (“Fed”) is responsible for the formulation of policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments. Duration is an estimated measure of the price sensitivity of a bond to a change in interest rates. Important Information The fund’s benchmark is the Bloomberg New York Municipal Bond Index. The Linked Bloomberg New York Muni Bond/Muni Bond Index reflects performance of the Bloomberg Municipal Bond Index from the fund’s inception through 7/31/1993 and the Bloomberg New York Municipal Bond Index thereafter. The Bloomberg New York Municipal Bond Index is a market value weighted index of New York investment-grade fixed-rate municipal bonds with maturities of one year or more. Source: Bloomberg Indices. Important data provider notices and terms available at www.franklintempletondatasources.com. 30-day SEC yield is calculated using the net income (interest and dividends) per share earned over a trailing 30-day period (annualized), divided by the fund’s share price at the end of that period. It may not equal the fund’s actual income distribution rate, which reflects the fund’s past dividends paid to shareholders. Before investing, carefully consider a fund’s investment objectives, risks, charges and expenses. You can find this and other information in each prospectus, or summary prospectus, if available, at www.franklintempleton.com. Please read it carefully. © Franklin Templeton. Franklin Distributors, LLC. Member FINRA/SIPC. |
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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
