Franklin Universal Trust

Franklin Universal Trust is a closed-end fund designed to generate high current income while aiming to preserve investor capital. Its core strategy combines a substantial allocation to fixed income securities with a complementary equity component, as of March 2025 comprising about 62% fixed income and 35% equities, with the balance in cash and equivalents. The fund invests broadly across sectors such as finance, energy, industrials, and utilities, with top holdings including major energy and utility companies. A distinguishing feature is its managed distribution policy, which provides steady monthly payments—recently set at $0.0425 per share. However, a significant portion of these payouts are sourced from return of capital, reflecting recent trends toward higher ROC ratios, which can lead to principal erosion over time. Franklin Universal Trust employs leverage to enhance yield, a strategy that increases both income potential and exposure to interest rate risk. With its focus on income generation, the fund appeals primarily to investors seeking reliable cash flow, while also presenting unique considerations regarding sustainability and risk within the current market environment.