You’re looking for income. Everyone is. But when you stumble across Franklin Income Class C, things get complicated fast. It’s one of those legacy funds that’s been around forever—literally since the 1940s—but the "Class C" part of the name carries baggage that a lot of modern investors don't really understand until they see their returns lagging.
It’s a giant. We're talking about a fund that manages tens of billions of dollars. It’s managed by Edward Perks and his team at Franklin Templeton. They’ve seen every market cycle since the Carter administration. But is the Class C share still a smart move in a world of zero-commission ETFs?
Honestly? Maybe not for everyone.
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The Reality of the Class C Share Structure
Let’s get the technical stuff out of the way first. Franklin Income Class C (often found under the ticker FRXCX) isn’t just a different version of the fund; it’s a different way of paying the people who sell it to you. While Class A shares usually hit you with a "front-end load" (a commission you pay when you buy), Class C shares use a "level load."
You don't pay to get in. That feels good, right?
But you pay every single year. The 12b-1 fees—which are basically marketing and distribution fees—are much higher on Class C shares than on Class A or Advisor shares. For FRXCX, you’re looking at an expense ratio that often hovers around 1.50% or higher. Compare that to the Class A shares, which might be closer to 0.60% plus that initial fee. Over five or ten years, that 1% difference eats your lunch. It’s a slow bleed.
If you stay in Class C shares for a long time, you’re basically overpaying for the privilege of not having paid a fee on day one. Most of these shares eventually "convert" to Class A shares after several years (usually eight or ten depending on the specific prospectus updates), which lowers the internal cost. But until that happens, your yield is getting shaved.
What’s Actually Inside the Portfolio?
The Franklin Income Fund is a hybrid. It’s a "mushy" fund, and I mean that in the best way possible. It doesn't just buy stocks. It doesn't just buy bonds. It hunts for yield wherever it can find it.
The managers are currently balancing a mix of high-yield corporate bonds, dividend-paying common stocks, and occasionally preferred securities. You'll see big names in there—think Chevron, JPMorgan Chase, or Broadcom. They want companies that spit out cash.
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But here’s the kicker: because it’s a high-income fund, it takes risks. It loves "junk" bonds (high-yield debt). When the economy is screaming, those bonds pay out like a slot machine. When things get shaky? They can drop just as fast as stocks.
It’s not a "safe" bond fund. It’s an income engine.
Why the 2026 Market Changes the Equation
We aren't in 2021 anymore. The interest rate environment has shifted. For a long time, you had to buy Franklin Income Class C just to get a 4% or 5% yield because savings accounts paid nothing. Now, with "risk-free" rates being much more competitive, the bar for this fund is higher.
If you can get 4% in a money market, why pay 1.5% in management fees to try and get 6% in a Class C fund? You’re netting less than the "safe" money after you account for the risk and the fees.
The Performance Gap Nobody Mentions
Check the charts. If you compare the total return of the Class A shares (FKINX) versus the Franklin Income Class C (FRXCX), the gap is visible. It’s the same managers. They buy the same Apple stock and the same Ford bonds. But the Class C investor almost always ends up with less money in their pocket at the end of the year because of the fee drag.
It’s about $10,000 versus maybe $9,400 over a specific period just because of the math of expenses.
Is There an Upside?
There is. If you have a short time horizon—say, three years—and you absolutely refuse to pay an upfront commission, Class C might make sense. It’s also "liquid" in a way that some private credit intervals aren't.
Also, the management team is elite. Ed Perks is a veteran. He knows how to navigate "fallen angels"—those companies that were investment grade but got downgraded to junk. He buys them when everyone else is panicking. That kind of active management is hard to find in a cheap index fund.
Common Misconceptions About the 12b-1 Fee
People think the 12b-1 fee goes to Franklin Templeton to make them richer. Kinda. But mostly, it goes to the broker who sold you the fund. It’s a "trailing commission." It pays for the "service" your advisor provides. If you aren't getting active, high-level advice from the person who put you in this fund, you are paying for a ghost.
You're paying for a seat at a table where no one is serving you dinner.
Tax Implications You Might Hate
This fund is a tax nightmare if you hold it in a regular brokerage account. Because it’s constantly churning out dividends and interest, you’re going to get a 1099 every year that forces you to pay taxes on those gains.
It belongs in an IRA. Or a 401(k).
If you have Franklin Income Class C in a taxable account, you’re paying the high 1.5% fee AND you're paying the IRS on the distributions. It’s a double whammy on your actual take-home wealth.
The "Yield Trap" Risk
Sometimes the yield on FRXCX looks incredible. 6%. 7%. Maybe more.
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But you have to look at the Net Asset Value (NAV). If the fund is paying out 7% but the share price is dropping by 8% a year, you aren't making money. You’re just getting your own capital handed back to you while the fund shrinks. Historically, Franklin Income has been pretty good about not "eroding" capital, but in a high-inflation environment, "staying flat" is effectively losing.
Comparing to the Competition
You could go buy an ETF like VYM (Vanguard High Dividend Yield) or SCHD (Schwab US Dividend Equity). Those cost almost nothing—maybe 0.06%.
The difference? Those are 100% stocks. Franklin Income Class C gives you that bond cushion. During a market crash, the Franklin fund will likely drop less than a pure dividend stock ETF. That’s the "safety" you’re paying for. Whether it's worth 1.5% a year is the big question you have to answer.
How to Handle Your Current Holding
If you already own this fund, don't panic-sell. Look at your holding period.
If you've owned it for five years, you might be close to the conversion point where it turns into a cheaper share class anyway. If you just bought it yesterday? You might have a Contingent Deferred Sales Charge (CDSC). That’s a fancy way of saying "exit fee." Usually, if you sell Class C shares within the first year, they take 1% right off the top.
It’s a "hotel California" share class. You can check out any time you like, but it’ll cost you.
Actionable Steps for Income Seekers
- Check Your Share Class: Look at your statement. If it says FRXCX, you're in Class C. If it says FKINX, you're in Class A. If you see "Advisor" or "R6" shares, stay put—those are the cheap ones.
- Calculate the Fee Drag: Take your total balance and multiply it by 0.015. That is roughly what you are paying every year. If that number is $1,500 and your advisor hasn't called you in two years, it's time to move.
- Audit the Tax Location: Move this fund to a tax-advantaged account (like a Roth or Traditional IRA) if possible to avoid the annual tax hit on the high-yield distributions.
- Evaluate the "Total Return": Stop looking at just the monthly check. Look at the share price plus the check. If the share price is consistently lower than it was three years ago, the income isn't "free."
- Consider the "A Share" Switch: If you love the management of Ed Perks but hate the C-share fees, ask your broker if you can "exchange" into Class A shares. You might have to pay a one-time fee, but it usually saves you money over any timeline longer than three years.
The Franklin Income Class C shares aren't a scam. They’re just an older way of doing business. In today's market, where every basis point matters, being aware of these internal costs is the difference between a comfortable retirement and one where you're constantly wondering where the money went.
Franklin Templeton is a solid house. The fund is a classic for a reason. Just make sure you aren't paying for the "luxury" version of a product when the standard version does the exact same thing for half the price.
Investors often get blinded by the "yield" and forget that the "cost" is the only thing they can actually control. Control it. Look at your fees. And if you’re staying in Class C, make sure you know exactly why you’re doing it.