Any investors hoping to find an Allocation Balanced fund could think about starting with Franklin Corefolio Allocation A (FTCOX). FTCOX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
FTCOX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
Franklin Templeton is responsible for FTCOX, and the company is based out of San Mateo, CA. Franklin Corefolio Allocation A debuted in August of 2003. Since then, FTCOX has accumulated assets of about $659.90 million, according to the most recently available information. The fund's current manager, T. Anthony Coffey, has been in charge of the fund since August of 2003.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FTCOX has a 5-year annualized total return of 7.17% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 8.64%, which places it in the top 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. FTCOX's standard deviation over the past three years is 10.1% compared to the category average of 7.87%. The standard deviation of the fund over the past 5 years is 10.3% compared to the category average of 8.06%. This makes the fund more volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. FTCOX lost 51.82% in the most recent bear market and underperformed its peer group by 15.58%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Even still, the fund has a 5-year beta of 0.99, so investors should note that it is hypothetically as volatile as 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. FTCOX's 5-year performance has produced a negative alpha of -3.39, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is mostly on equities that are traded in the United States.
As of the last filing date, the mutual fund has 81.89% of its assets in stocks and it has a negligible amount of assets in foreign securities. Turnover is 2.36%, which means, on average, the fund makes fewer trades than the average comparable fund.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FTCOX is a load fund. It has an expense ratio of 0.43% compared to the category average of 0.90%. So, FTCOX is actually cheaper than its peers from a cost perspective.
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 Corefolio Allocation A ( FTCOX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Franklin Corefolio Allocation A ( FTCOX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Allocation Balanced, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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