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Looking for an International Bond - Emerging fund? You may want to consider Franklin Emerging Market Debt Opportunity Adviser (FEMDX - Free Report) as a possible option. FEMDX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FEMDX is an International Bond - Emerging option, which is loaded with different choices. International Bond - Emerging funds focus on fixed income securities from a variety of emerging international markets. Typically, investors can expect exposure to economies like China, Brazil, India, South Africa, Indonesia, and many others. These funds are appealing because of their geographic diversification, but this can also mean that currency risk is a factor.
History of Fund/Manager
Franklin Templeton is responsible for FEMDX, and the company is based out of San Mateo, CA. Franklin Emerging Market Debt Opportunity Adviser made its debut in October of 2006, and since then, FEMDX has accumulated about $516.29 million 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. FEMDX has a 5-year annualized total return of 3.54% 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 6.6%, 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. FEMDX's standard deviation over the past three years is 6.19% compared to the category average of 7.77%. The fund's standard deviation over the past 5 years is 6.27% compared to the category average of 7.67%. 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For those that believe interest rates will rise, this is an important factor to consider. FEMDX has a modified duration of 4.23, which suggests that the fund will decline 4.23% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 7.9% means that a $10,000 investment should result in a yearly payout of $790.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. FEMDX carries a beta of 0.66, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 2.75, which measures performance on a risk-adjusted basis.
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, FEMDX is a no load fund. It has an expense ratio of 1% compared to the category average of 1.17%. FEMDX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin Emerging Market Debt Opportunity Adviser ( FEMDX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
Don't stop here for your research on International Bond - Emerging funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FEMDX to its peers as well 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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Is FEMDX a Strong Bond Fund Right Now?
Looking for an International Bond - Emerging fund? You may want to consider Franklin Emerging Market Debt Opportunity Adviser (FEMDX - Free Report) as a possible option. FEMDX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that FEMDX is an International Bond - Emerging option, which is loaded with different choices. International Bond - Emerging funds focus on fixed income securities from a variety of emerging international markets. Typically, investors can expect exposure to economies like China, Brazil, India, South Africa, Indonesia, and many others. These funds are appealing because of their geographic diversification, but this can also mean that currency risk is a factor.
History of Fund/Manager
Franklin Templeton is responsible for FEMDX, and the company is based out of San Mateo, CA. Franklin Emerging Market Debt Opportunity Adviser made its debut in October of 2006, and since then, FEMDX has accumulated about $516.29 million 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. FEMDX has a 5-year annualized total return of 3.54% 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 6.6%, 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. FEMDX's standard deviation over the past three years is 6.19% compared to the category average of 7.77%. The fund's standard deviation over the past 5 years is 6.27% compared to the category average of 7.67%. 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, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For those that believe interest rates will rise, this is an important factor to consider. FEMDX has a modified duration of 4.23, which suggests that the fund will decline 4.23% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 7.9% means that a $10,000 investment should result in a yearly payout of $790.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. FEMDX carries a beta of 0.66, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 2.75, which measures performance on a risk-adjusted basis.
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, FEMDX is a no load fund. It has an expense ratio of 1% compared to the category average of 1.17%. FEMDX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Franklin Emerging Market Debt Opportunity Adviser ( FEMDX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
Don't stop here for your research on International Bond - Emerging funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FEMDX to its peers as well 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.