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Is Franklin Utilities A (FKUTX) a Strong Mutual Fund Pick Right Now?
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There are plenty of choices in the Sector - Utilities category, but where should you start your research? Well, one fund that may not be worth investigating is Franklin Utilities A (FKUTX - Free Report) . FKUTX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FKUTX is Sector - Utilities, which is a segment packed with options. Known for its stability, the utility industry is perfect for investors seeking low risk. Sector - Utilities mutual funds focus on companies that provide essential services to millions of people on a daily basis: think electric power, gas distribution, and water supply.
History of Fund/Manager
Franklin Templeton is responsible for FKUTX, and the company is based out of San Mateo, CA. Franklin Utilities A debuted in September of 1948. Since then, FKUTX has accumulated assets of about $4.29 billion, according to the most recently available information. John Kohli is the fund's current manager and has held that role since December of 1998.
Performance
Of course, investors look for strong performance in funds. FKUTX has a 5-year annualized total return of 11.41% and it sits 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 6.44%, 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. The standard deviation of FKUTX over the past three years is 12.09% compared to the category average of 9.08%. The standard deviation of the fund over the past 5 years is 12.4% compared to the category average of 11.1%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, FKUTX lost 34.79% and outperformed its peer group by 8.58%. This could mean that the fund is a better choice than comparable funds during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FKUTX has a 5-year beta of 0.4, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 5.53, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
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, FKUTX is a load fund. It has an expense ratio of 0.75% compared to the category average of 1.23%. From a cost perspective, FKUTX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,000, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Franklin Utilities A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Franklin Utilities A looks like a somewhat weak choice for investors right now.
Your research on the Sector - Utilities segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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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Is Franklin Utilities A (FKUTX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Sector - Utilities category, but where should you start your research? Well, one fund that may not be worth investigating is Franklin Utilities A (FKUTX - Free Report) . FKUTX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes FKUTX is Sector - Utilities, which is a segment packed with options. Known for its stability, the utility industry is perfect for investors seeking low risk. Sector - Utilities mutual funds focus on companies that provide essential services to millions of people on a daily basis: think electric power, gas distribution, and water supply.
History of Fund/Manager
Franklin Templeton is responsible for FKUTX, and the company is based out of San Mateo, CA. Franklin Utilities A debuted in September of 1948. Since then, FKUTX has accumulated assets of about $4.29 billion, according to the most recently available information. John Kohli is the fund's current manager and has held that role since December of 1998.
Performance
Of course, investors look for strong performance in funds. FKUTX has a 5-year annualized total return of 11.41% and it sits 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 6.44%, 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. The standard deviation of FKUTX over the past three years is 12.09% compared to the category average of 9.08%. The standard deviation of the fund over the past 5 years is 12.4% compared to the category average of 11.1%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, FKUTX lost 34.79% and outperformed its peer group by 8.58%. This could mean that the fund is a better choice than comparable funds during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FKUTX has a 5-year beta of 0.4, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 5.53, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
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, FKUTX is a load fund. It has an expense ratio of 0.75% compared to the category average of 1.23%. From a cost perspective, FKUTX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,000, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Franklin Utilities A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Franklin Utilities A looks like a somewhat weak choice for investors right now.
Your research on the Sector - Utilities segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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.