If investors are looking at the Sector - Health fund category, Franklin Biotechnology Discovery A FBDIX could be a potential option. FBDIX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes FBDIX as Sector - Health, a segment packed with options. Sector - Health mutual funds offer investors a focus on the healthcare industry, one of the largest sectors in the American economy. These funds can include everything from pharmaceutical companies to medical device manufacturers and for-profit hospitals.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of FBDIX. Franklin Biotechnology Discovery A made its debut in September of 1997, and since then, FBDIX has accumulated about $1.12 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 16.75%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -1.44%, which places it in the middle third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 10.93%, the standard deviation of FBDIX over the past three years is 25.33%. Looking at the past 5 years, the fund's standard deviation is 24.74% compared to the category average of 10.62%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. FBDIX lost 25.67% in the most recent bear market and outperformed its peer group by 7.2%. This makes the fund a possibly better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.32, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. FBDIX has generated a negative alpha over the past five years of -0.03, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FBDIX is a load fund. It has an expense ratio of 1.03% compared to the category average of 1.30%. Looking at the fund from a cost perspective, FBDIX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment has no minimum amount.
Overall, Franklin Biotechnology Discovery A has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Franklin Biotechnology Discovery A looks like a good potential choice for investors right now.
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