The simultaneous decline in stocks and bonds followed an unusual starting point: rates were extremely low, leaving little income carry to offset bond-price losses. Perks argues that today's higher starting yields make the same setup less likely, though not impossible.

Very low starting yields removed bonds' income cushion
Rate normalization produced unusually large fixed-income losses
Today's yield backdrop differs materially from 2022
Bonds can again diversify a multi-asset portfolio

“you didn't have the carried offset negative returns and fixed income”
Ed Perks · 24:42

“we really think we're in that certainly not in that position today.”
Ed Perks · 24:59

#2022#diversification#bonds#rates

Myth Buster45:36

Why Sharpe Ratios Can Mislead in Private Credit

Perks considers private credit a viable asset class but rejects comparisons that rely heavily on apparently smooth private-market volatility. Infrequent marks undermine public-versus-private Sharpe-ratio comparisons, while rapid capital inflows raise the risk of weaker underwriting discipline.

Private credit has a legitimate portfolio role
Infrequent valuation marks can suppress measured volatility
Sharpe ratios are weak tools for comparing public and private assets
Large inflows can encourage less disciplined deployment
Credit quality and transparency deserve close monitoring

“I think using volatility measures is somewhat debunked.”
Ed Perks · 46:14

“When you see the kind of capital moving into a certain area, there's just a greater risk of maybe less disciplined things happening.”
Ed Perks · 46:55

#private credit#sharpe ratio#volatility#risk

Myth Buster47:44

Income Investing Is Broader Than Dividend Stocks

Income investors do not have to confine themselves to utilities or conventional dividend payers. Convertibles and structured equity can reshape the payoff of low- or non-dividend stocks, opening exposure to companies such as Amazon, Microsoft, and Meta while preserving an income-oriented mandate.

Traditional utility stocks are only one source of equity income
Many S&P 500 companies pay little or no dividend
Convertibles can add income and retain equity participation
Structured equity can create a defined one- or two-year payoff
Income portfolios can access megacap technology companies

“the reality is much broader than that.”
Ed Perks · 48:06

“we really have a much broader cross section in the equity markets to pursue investments.”
Ed Perks · 48:44

#income investing#dividends#convertibles#structured equity

Hot Take· 2

Hot Take35:43

Passive Flows May Be Widening the Megacap Divide

The flow of capital into capitalization-weighted passive products may amplify the performance gap between the largest companies and the average stock. Perks argues that active investors can still find liquid, underexamined companies outside the dominant index names.

Cap-weighted indices direct more money toward the largest stocks
The S&P 500 outpaced its equal-weight version dramatically
Dispersion can create neglected-stock opportunities
Active selection remains viable outside megacap leaders

“the flood of money into passive investments has maybe exacerbated some of these dynamics”
Ed Perks · 37:00

“we can turn over rocks that maybe other investors are not looking at”
Ed Perks · 37:28

#passive investing#megacap#active management#equities

Hot Take52:53

Policy Uncertainty Is High, but the VIX Says Otherwise

Perks sees a disconnect between significant policy and election uncertainty and very low implied volatility. Rather than exiting markets, he favors maintaining income-producing exposure while preserving enough flexibility to respond if volatility reprices.

Policy remains a primary market driver
Midterm elections add uncertainty
Implied volatility is unusually low relative to visible risks
Low expected volatility warrants caution rather than automatic selling
Portfolio nimbleness matters when complacency is elevated

“Maybe one of the things that concerns me that investors are not talking about is if we were to think about the level of uncertainty…”
Ed Perks · 53:06

“we want to be a little bit more cautious when naturally there is not a lot of volatility expected to be coming in markets.”
Ed Perks · 53:40

#vix#policy#volatility#elections

Explainer· 3

Explainer08:55

Why Fixed-Income Investors See Risk Differently

Credit and equity analysts ask different questions about the same company. Combining their perspectives reveals how management generates capital, allocates it, and presents different narratives to different investor groups.

Credit analysis emphasizes downside and repayment capacity
Equity analysis emphasizes profits and upside
Joint management meetings expose differences in issuer narratives
Capital allocation connects both analytical perspectives

“they in fact have kind of different stories for those different investor groups.”
Ed Perks · 09:55

“what we're doing is trying to figure out what money they will have, i e. What are margins, how are profits growing, and what they'll…”
Ed Perks · 10:09

#fixed income#risk#capital allocation#analysis

Explainer31:50

Why Lower Mortgage Rates Alone May Not Revive Housing

Lower long-term rates would support mortgage and housing activity, but Perks cautions against treating one mortgage-rate threshold as a sufficient trigger. Economic health and labor-market conditions also determine whether buyers can re-enter the market.

Agency-mortgage spreads responded to potential government purchases
Lower long-term rates would support housing activity
No single mortgage rate guarantees a housing rebound
Employment and economic health remain essential

“ultimately bringing longer term rates down is going to be probably the biggest beneficiary in terms of activity within the housing market.”
Ed Perks · 32:07

“Certainly the overall healthy the economy and the labor market are going to be a major major component”
Ed Perks · 32:34

#housing#mortgages#labor market#interest rates

Explainer33:25

The Labor Market Is Stuck Between Hiring and Firing

Perks characterizes the labor market as stagnant rather than collapsing. Tariff uncertainty and AI discourage new hiring, while companies also remain reluctant to conduct major layoffs, producing low mobility on both sides.

Labor weakness helped justify renewed rate cuts
Policy uncertainty discourages corporate hiring
AI is changing employers' labor calculations
Reluctance to hire and fire creates stagnation

“there's a reluctance maybe at the corporate level to hires, a lot of uncertainty.”
Ed Perks · 33:44

“So there's this reluctance maybe to hire in a reluctance to fire.”
Ed Perks · 34:03

#labor market#ai#tariffs#federal reserve

Story· 3

Story03:55

How Cross-Asset Experience Shaped Ed Perks's Career

Perks entered Franklin Templeton through marketing research, used the role to understand the firm's strategies, and moved into equity research after beginning the CFA program. Volunteering when new areas opened gave him experience in credit, equities, and convertibles before he became a portfolio manager.

Marketing research provided broad exposure to the investment business
Perks prepared for research by taking a CFA exam
He volunteered when new responsibilities became available
Convertible portfolio management became an important career transition

“whenever we had some movement in the group or growth adding resources in a certain area that was interesting, I kind of was inclined to…”
Ed Perks · 06:41

#career#franklin-templeton#convertibles#research

Story27:28

The 75-Year Evolution of the Franklin Income Fund

The Franklin Income Fund originated as a flexible combination of the four principal asset classes offered by the original custodian funds. Its mandate was to select the most attractive income investments across those groups, and it has maintained uninterrupted monthly dividends since launch.

The fund traces its history to the original Franklin custodian funds
Its source asset classes were bonds, stocks, preferreds, and utilities
The income fund was designed to choose among all four
It has an unusually long record of monthly distributions

“the final series of custodian funds was the Income Fund, which was meant to look at those other four strategies for asset classes and find…”
Ed Perks · 30:10

#franklin-income-fund#fund history#dividends#multi-asset

Story54:14

The Handwritten Letter That Defined Fiduciary Responsibility

When the Franklin Income Fund reduced its dividend, Charles Johnson gave Perks a handwritten letter from a concerned investor and asked him to respond personally. The experience made the human consequences of portfolio decisions tangible and became a leadership lesson Perks carried into his team.

A modest dividend cut affected an investor's everyday finances
Franklin's chairman treated the individual letter as important
Perks wrote a direct explanation to the investor
The episode reinforced the human role of asset management

“we need to stay connected to just the role we are playing in individuals lives.”
Ed Perks · 56:01

“how you stay focused on the people that have entrusted their money to us is just paramount importance.”
Ed Perks · 54:48

#fiduciary duty#leadership#investors#client communication

Takeaway· 3

Takeaway10:43

The Bond Market Is Investable Again

Post-crisis monetary policy made large portions of fixed income unattractive for an extended period. Higher yields restored the income carry that bonds had lacked, although future total returns may depend more on income than a large decline in rates.

Policy suppressed fixed-income attractiveness after 2009
The 2022 repricing restored meaningful yields
Income carry can provide a stable core of total return
Large rate-driven capital gains are not required for bonds to be useful

“the bond market being back was announced pretty loudly in twenty twenty two.”
Ed Perks · 11:03

“the total return potential from fixed income might be more muted”
Ed Perks · 11:23

#bonds#yield#interest rates#income

Takeaway17:57

Where Fixed-Income Income Looks Attractive

Perks sees opportunities across Treasuries, agency mortgages, investment-grade corporates, and high-yield bonds rather than in one dominant sector. With broad asset-class shifts less compelling, relative value between sectors and individual security selection matter more.

Income carry is attractive across several fixed-income sectors
Tight corporate spreads warrant caution but can persist
Agency mortgages gained appeal when their spreads widened
Current opportunities rely more on relative value and issuer selection

“we are really pretty diversified across the range.”
Ed Perks · 17:57

“today we think that lever is a little less important and it's a little bit more about relative value between sectors and or security selection…”
Ed Perks · 19:03

#treasuries#mortgages#corporate bonds#high yield

Takeaway59:01

Explore Before You Specialize in Finance

Perks advises graduates not to overdefine their destination before gaining practical experience. Entering an interesting industry, exploring adjacent roles, and volunteering for opportunities can reveal a better-fitting career than an overly specific first-job plan.

Avoid premature specialization
Choose an interesting industry before insisting on one exact role
Let practical experience reshape the plan
Volunteer when adjacent opportunities arise
A first job does not have to determine an entire career

“Get in a seat somewhere in an industry that you think is interesting, and see where it takes you, and don't be afraid to put…”
Ed Perks · 59:37

“You have plenty of time. You have nothing but time.”
Barry Ritholtz · 59:48

#career advice#graduates#finance#specialization

Frameworks in this episode

Capital-Structure Relative Value

Credit-Improvement Selection

Investor DNA Alignment

Three-Risk Allocation Compass

Volatility Portfolio Recharge

Insights & moments

⚡Myth Buster· 3

Why 2022's Stock-and-Bond Losses Were Unusual