FTF: Deep Discount And High Distribution Rate, But Not Enough To Make It Appealing

Franklin Limited Duration Income Trust (FTF) offers a 12%+ yield and trades at an -8.3% discount, appealing to income-focused investors, but we have some cautions. FTF's distribution coverage has deteriorated, with net investment income covering only ~77% of payouts, raising concerns about long term sustainability. Limited duration and floating-rate exposure position FTF defensively amid uncertain Fed policy, with inflation expectations rising.