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Franklin Making Failed Puerto Rico Fund Disappear Through Merger

  • Double Tax-Free Income Fund has 49% of assets in island debt
  • Merger would fold Puerto Rico securities into larger fund
Updated on

Puerto Rico’s debt exchange isn’t the only security swap for investors burned by the island’s financial collapse.

Franklin Resources Inc. plans to close the $147 million Double Tax-Free Income Fund, whose strategy of plowing more of its assets into Puerto Rico than any other municipal-bond fund turned it into one of the worst performers. After the fund shriveled when investors pulled out money, Franklin is asking those remaining to exchange their shares for a piece of the $8.3 billion High Yield Tax-Free Income Fund, which has far less exposure to the island.