The $5.5 billion Franklin Templeton Founding Funds Allocation last week got a Negative rating from research shop Morningstar.

So what went wrong for the fund? Well, according to analyst Rob Wherry, the fund’s allocation to three of the parent firm's flagship offerings: Bronze-rated Franklin Income (FKINX), Neutral-rated Templeton Growth (TEPLX), and Bronze-rated Mutual Shares (TESIX), just isn’t working out.

“Franklin Income is a conservative-allocation offering that currently sports a hefty 6.4% yield due to its heavy tilt toward utilities, dividend-paying stocks, and junk bonds. Mutual Shares is a deep-value fund with flexibility to invest across a company's capital structure. Templeton Growth gives this fund its primary international exposure,” wrote Wherry.

“On their own, those investments have merit. But in combination, the funds mute some of each other's strengths.”

Wherry explained that Franklin Income’s sizable credit risk taking has helped fuel the fund's returns versus peers in rallies, but has also made it vulnerable during downturns. And while Mutual Shares employs a strict valuation process, its so-so performance record reflects the managers' penchant for buying out-of-favor stocks.

Also, Templeton Growth has struggled with stock-picking and manager turnover, leading to an overall lackluster record, according to Wherry.

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