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Is Franklin Gold & Precious Metals A (FKRCX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Sector - Precious Metal fund could think about starting with Franklin Gold & Precious Metals A (FKRCX - Free Report) . FKRCX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FKRCX is a Sector - Precious Metal option, and this area is loaded with different options. Sector - Precious Metal funds typically invest in companies that are involved in the mining and production of precious metals like gold, silver, platinum, and palladium. Because stocks in this environment often trade as leveraged bets of the underlying commodity--they are tied to the prices of the metal--these equities tend to be volatile.

History of Fund/Manager

FKRCX is a part of the Franklin Templeton family of funds, a company based out of San Mateo, CA. Franklin Gold & Precious Metals A made its debut in May of 1969, and since then, FKRCX has accumulated about $913.58 million in assets, per the most up-to-date date available. Steve Land is the fund's current manager and has held that role since April of 1999.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 5.77%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 23.43%, 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 FKRCX over the past three years is 37.81% compared to the category average of 20.19%. The standard deviation of the fund over the past 5 years is 33.14% compared to the category average of 17.61%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.99, so it is likely going to be as volatile as 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 negative alpha of -6.46. This means 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, FKRCX is a load fund. It has an expense ratio of 0.87% compared to the category average of 1.37%. FKRCX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $1,000, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Franklin Gold & Precious Metals A ( FKRCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Precious Metal, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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