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Muni - Bonds fund seekers should not consider taking a look at Franklin California High Yield Municipals A (FCAMX - Free Report) at this time. FCAMX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FCAMX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of FCAMX. The Franklin California High Yield Municipals A made its debut in May of 1993 and FCAMX has managed to accumulate roughly $1.37 billion in assets, as of the most recently available information. The fund is currently managed by John Wiley who has been in charge of the fund since May of 1993.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.87%, 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 3.38%, 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 FCAMX over the past three years is 4.44% compared to the category average of 6.8%. The standard deviation of the fund over the past 5 years is 4.99% compared to the category average of 6.95%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. FCAMX has a modified duration of 6.68, which suggests that the fund will decline 6.68% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.26% means that a $10,000 investment should result in a yearly payout of $526.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 1.32, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, FCAMX has a positive alpha of 0.73, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, FCAMX has 31.89% in high quality bonds rated at least 'AA' or higher, while 41.06% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
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, FCAMX is a load fund. It has an expense ratio of 0.63% compared to the category average of 0.87%. From a cost perspective, FCAMX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin California High Yield Municipals A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Franklin California High Yield Municipals A looks like a somewhat weak choice for investors right now.
Your research on the Muni - Bonds 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Is FCAMX a Strong Bond Fund Right Now?
Muni - Bonds fund seekers should not consider taking a look at Franklin California High Yield Municipals A (FCAMX - Free Report) at this time. FCAMX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FCAMX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of FCAMX. The Franklin California High Yield Municipals A made its debut in May of 1993 and FCAMX has managed to accumulate roughly $1.37 billion in assets, as of the most recently available information. The fund is currently managed by John Wiley who has been in charge of the fund since May of 1993.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.87%, 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 3.38%, 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 FCAMX over the past three years is 4.44% compared to the category average of 6.8%. The standard deviation of the fund over the past 5 years is 4.99% compared to the category average of 6.95%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. FCAMX has a modified duration of 6.68, which suggests that the fund will decline 6.68% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.26% means that a $10,000 investment should result in a yearly payout of $526.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 1.32, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, FCAMX has a positive alpha of 0.73, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, FCAMX has 31.89% in high quality bonds rated at least 'AA' or higher, while 41.06% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
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, FCAMX is a load fund. It has an expense ratio of 0.63% compared to the category average of 0.87%. From a cost perspective, FCAMX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin California High Yield Municipals A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Franklin California High Yield Municipals A looks like a somewhat weak choice for investors right now.
Your research on the Muni - Bonds 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.