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Is Franklin Biotechnology Discovery A (FBDIX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Sector - Health fund category, Franklin Biotechnology Discovery A (FBDIX - Free Report) 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.

Objective

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.

Performance

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.

Risk Factors

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.

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, 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.

Bottom Line

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.

Want even more information about FBDIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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