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Is Templeton Developing Markets A (TEDMX) a Strong Mutual Fund Pick Right Now?

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Non US - Equity fund seekers may want to consider taking a look at Templeton Developing Markets A (TEDMX - Free Report) . TEDMX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes TEDMX as Non US - Equity, a segment stacked high with options. Non US - Equity mutual funds like to invest in companies outside of the United States, an important characteristic since global mutual funds are known to keep a good portion of their portfolio stateside. These kinds of funds can often extend across all cap levels, and will typically allocate their investments between emerging and developed markets.

History of Fund/Manager

Franklin is based in San Mateo, CA, and is the manager of TEDMX. The Templeton Developing Markets A made its debut in October of 1991 and TEDMX has managed to accumulate roughly $696.16 million in assets, as of the most recently available information. Chetan Sehgal is the fund's current manager and has held that role since April of 2017.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 2.19%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -7.31%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 TEDMX over the past three years is 20.47% compared to the category average of 14.95%. Looking at the past 5 years, the fund's standard deviation is 21.13% compared to the category average of 16.12%. 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 0.84, which means it is hypothetically less 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. The fund has produced a negative alpha over the past 5 years of -8.75, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, TEDMX is a load fund. It has an expense ratio of 1.38% compared to the category average of 0.99%. TEDMX is actually more expensive than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively similar performance, worse downside risk, and higher fees, Templeton Developing Markets A ( TEDMX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.

Your research on the Non US - Equity 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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