Back to top

Image: Bigstock

Is FKTFX a Strong Bond Fund Right Now?

Read MoreHide Full Article

If you've been stuck searching for Mutual Fund Bond funds, you might want to consider passing on by Franklin California Tax-Free Income A (FKTFX - Free Report) as a possibility. FKTFX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Franklin Templeton is based in San Mateo, CA, and is the manager of FKTFX. Franklin California Tax-Free Income A made its debut in February of 1977, and since then, FKTFX has accumulated about $10.82 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 3.37%, 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 5.65%, 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. FKTFX's standard deviation over the past three years is 5.34% compared to the category average of 13.14%. Over the past 5 years, the standard deviation of the fund is 5.07% compared to the category average of 10.98%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.9, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FKTFX has a negative alpha of -0.66, 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, FKTFX is a load fund. It has an expense ratio of 0.60% compared to the category average of 0.80%. So, FKTFX is actually cheaper than its peers from a cost perspective.

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 California Tax-Free Income A ( FKTFX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Franklin California Tax-Free Income A ( FKTFX ) looks like a somewhat weak choice for investors right now.

Your research on the Mutual Fund Bond 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Franklin California Tx-Fr Inc A1 (FKTFX) - free report >>

Published in