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Is Franklin DynaTech Adviser (FDYZX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Sector - Tech category, but where should you start your research? Well, one fund that might be worth investigating is Franklin DynaTech Adviser (FDYZX - Free Report) . FDYZX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Sector - Tech funds is an area filled with options, and FDYZX is one of them. Sector - Tech mutual funds allow investors to own a stake in a notoriously volatile sector with a much more diversified approach. Tech companies can be in any number of industries such as semiconductors, software, internet, networking just to name a few.

History of Fund/Manager

Franklin Templeton is based in San Mateo, CA, and is the manager of FDYZX. Since Franklin DynaTech Adviser made its debut in November of 2010, FDYZX has garnered more than $930.46 million in assets. Rupert H. Johnson is the fund's current manager and has held that role since November of 2010.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 16.33%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 22.18%, 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. Compared to the category average of 10.27%, the standard deviation of FDYZX over the past three years is 15.73%. Looking at the past 5 years, the fund's standard deviation is 15.16% compared to the category average of 10.64%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of.

Even still, the fund has a 5-year beta of 1.13, 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. Over the past 5 years, the fund has a positive alpha of 5.37. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring 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 largely on equities that are traded in the United States.

This fund is currently holding about 82.19% stock in stocks, which have an average market capitalization of $163.79 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Health
Turnover is 19.24%, which means this fund makes fewer trades than the average comparable fund.

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, FDYZX is a no load fund. It has an expense ratio of 0.58% compared to the category average of 1.31%. Looking at the fund from a cost perspective, FDYZX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Franklin DynaTech Adviser ( FDYZX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

This could just be the start of your research on FDYZXin the Sector - Tech category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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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