Masters in Business

Franklin Templeton's Ed Perks on Fixed Income Investing

March 6, 2026

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  • Ed Perks' investment philosophy, honed through cross-asset experience including convertibles, emphasizes buying assets at reasonable valuations with a long-term horizon, prioritizing income generation while waiting for performance. 
  • The CIO of Franklin Templeton Income Investors actively monitors equity risk, credit risk, and interest rate risk to set asset allocation, viewing policy (fiscal, monetary, regulatory) as a paramount macro variable influencing daily decisions. 
  • For income investors, the reality is much broader than traditional bond-like stocks; opportunities exist across the capital structure, including structured equity and convertibles in large-cap tech, to blend higher yields while retaining upside potential. 
  • The host, Barry Ritholtz, concludes the episode of Bloomberg's Masters in Business and directs listeners to previous interviews. 
  • Long-term thinking, planning, diversification, and preparation for volatility are essential principles in following markets. 
  • Advertisements during the closing segment promoted Cincinnati Insurance for navigating tough moments, Red Line Hotels by Sinesta for travel, and Okta for securing AI agent identities. 

Segments

Ed Perks’ Career Origins
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(00:02:41)
  • Key Takeaway: Ed Perks joined Franklin Templeton in 1992 after graduating from Yale with a background in economics and political science, initially planning a short West Coast stint before landing a role in marketing research.
  • Summary: Perks’ initial career plan did not involve finance, leaning towards law or government after studying at Yale. He moved to the San Francisco Bay Area without a job and landed at Franklin, joining the original Franklin Funds before the Templeton merger. His transition to investment analysis followed a year and a half of work and completing one of the CFA exams.
Evolution of Investment Philosophy
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(00:08:38)
  • Key Takeaway: Convertible securities were a defining moment, teaching Perks to seek investments with positive asymmetry—where upside potential outweighs downside risk over a given time horizon.
  • Summary: Perks developed a philosophy centered on buying assets at reasonable valuations with a longer-term horizon, where income helps compensate for waiting. Experience with convertibles reinforced the appeal of securities offering better outcomes on the upside than losses on the downside. He notes that fixed income investors often exhibit a greater appreciation for risk management compared to equity-focused peers.
Macro Variables and Risk Assessment
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(00:13:11)
  • Key Takeaway: The CIO of Franklin Templeton Income Investors focuses proactively on equity risk, credit risk, and interest rate risk to guide asset allocation, while reactively monitoring policy and geopolitical risks daily.
  • Summary: Asset allocation compass is set by assessing equity, credit, and macro/interest rate risks, allowing allocations to swing widely (e.g., 75/25) despite a long-term target split. Policy matters significantly, encompassing fiscal, monetary, and regulatory actions, which must be monitored alongside geopolitical risks. The ultimate market reaction, reflected in the yield curve, determines the signal versus the noise in daily news flow.
Fixed Income Opportunities and Duration
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(00:21:31)
  • Key Takeaway: Current compelling risk-adjusted income opportunities are found across the diversified fixed income spectrum (Treasuries, MBS, IG, HY), with a current preference for higher-quality components within high yield.
  • Summary: The income component of fixed income is attractive again after a long period where it was not. Spreads on the corporate side are a slight concern, leading to a focus on idiosyncratic risk and security selection over major asset class shifts. Moving out of investment-grade corporate debt into agency mortgages worked well recently due to widening spreads.
Managing Volatility and Market Cycles
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(00:25:55)
  • Key Takeaway: Periods of extreme volatility, like the dot-com crash or the 2008 financial crisis, are challenging, but a flexible mandate allows the team to focus on optimizing portfolio positioning and playing offense during market downturns.
  • Summary: The 2022 environment, where both stocks and bonds saw double-digit losses, was fueled by rates declining to very low levels, removing the carry buffer for fixed income. Bonds can serve as a diversifier when yields are attractive, which was not the case for the prior 20 years. When bonds are called or mature, the resulting cash is redeployed to the next most attractive area, currently leaning toward structured equity or convertibles.
Franklin Income Fund History and Structure
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(00:31:33)
  • Key Takeaway: The flagship Franklin Income Fund, celebrating 75 years, has an unbroken record of monthly dividends dating back to 1948, originally designed to find the most attractive income investments across the four core asset classes.
  • Summary: Perks is only the third lead manager of the fund, which he took over in 2004 when it was around $8 billion AUM. The fund has expanded its vehicle offerings to include SMA and ETF structures to meet investor demand. Agency mortgages are a core component, but the strategy remains flexible to invest across the capital structure, including private assets.
Equity Allocation and Market Breadth
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(00:41:46)
  • Key Takeaway: Despite the dominance of mega-cap growth stocks, Perks sees significant opportunity in broader equity markets outside the market-cap weighted indices, favoring companies benefiting from secular dynamics like reshoring supply chains.
  • Summary: The performance gap between market-weighted indices and equal-weighted indices since 2023 highlights concentration risk. As an income investor, Perks seeks investments with favorable fundamentals that deliver over time, often utilizing convertible securities to access higher yields on companies like Amazon or Microsoft. He notes that non-U.S. markets outperformed the U.S. in 2025, partly due to the dollar dropping and a reallocation following years of U.S. outperformance.
Overlooked Risks and Investor Blind Spots
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(00:59:06)
  • Key Takeaway: Investors may be overlooking the low implied volatility reflected in indices like the VIX, which contrasts with the high level of uncertainty created by current policy dynamics, suggesting a potential disconnect.
  • Summary: Policy remains paramount, with midterm elections serving as a significant overhang. The low expected volatility in markets is concerning given the current level of uncertainty surrounding policy and geopolitical factors. This environment favors staying invested while focusing on areas that deliver attractive income and maintaining portfolio nimbleness.
Career Advice and Investor DNA
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(01:03:36)
  • Key Takeaway: Recent graduates should avoid specializing too early, instead seeking a seat in an interesting industry and being willing to raise their hand for new opportunities as their career path evolves.
  • Summary: Charles Johnson, a mentor, taught Perks the importance of staying connected to investors, exemplified by having Perks personally respond to a concerned investor letter regarding a dividend cut in 2002. The final piece of advice is to discover one’s inherent investor DNA early and not try to emulate strategies that do not align with one’s natural tendencies.
Podcast Conclusion and Archives
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(01:07:43)
  • Key Takeaway: Over 600 prior episodes of Masters in Business are available across major podcast platforms.
  • Summary: The host, Barry Ritholtz, directs listeners to access the 600 prior conversations from Bloomberg’s Masters in Business on platforms like Bloomberg, iTunes, Spotify, and YouTube. He acknowledges the production team responsible for compiling these weekly discussions. The segment concludes with the official sign-off for the show.
Long-Term Investment Philosophy
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(01:08:16)
  • Key Takeaway: Successful market participation requires long-term thinking, planning, diversification, and preparation for volatility.
  • Summary: Navigating markets successfully relies on adopting a long-term perspective. Key strategies include diligent planning, maintaining portfolio diversification, and proactively preparing for inevitable periods of volatility. Even the best strategies cannot entirely prevent market downturns.
Cincinnati Insurance Advertisement
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(01:08:28)
  • Key Takeaway: Cincinnati Insurance leverages 75 years of expertise, personal attention, and independent agents to assist clients during difficult financial moments.
  • Summary: Cincinnati Insurance offers support to individuals and businesses facing tough times, drawing on over 75 years of experience. Their approach emphasizes personal attention and relies on independent agents focused on building relationships rather than just completing transactions. Listeners can find an agent via cinfin.com.
Red Line Hotels Promotion
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(01:09:00)
  • Key Takeaway: Red Line Hotels by Sinesta offers restful sleep and local knowledge, providing best rates instantly upon joining the Synesta Travel Pass.
  • Summary: Red Line Hotels by Sinesta provides accommodations focused on restful sleep and local expertise for both business and leisure travelers. Travelers can reduce costs by signing up for the Synesta Travel Pass, which grants immediate access to their best rates. Bookings and membership sign-up are available at Sinesta.com.
Okta Securing AI Identities
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(01:09:19)
  • Key Takeaway: Okta provides a single layer of control and trust to secure the identities of AI agents, mitigating risks associated with their proliferation.
  • Summary: The widespread adoption of AI agents across various business functions necessitates robust identity verification to prevent jeopardization of operations. Okta addresses this by securing AI agents’ identities, establishing a unified standard of trust. This security framework allows enterprises to convert potential risks associated with AI into tangible opportunities.