Global - Equity fund seekers should not consider taking a look at Templeton Global Smaller Companies A (TEMGX Quick QuoteTEMGX - Free Report) at this time. TEMGX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes TEMGX as Global - Equity, which is a segment packed with options. Global - Equity mutual funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. They also provide an investment technique that leverages the diverse nature of the global economy in the hopes of providing a stable return.

History of Fund/Manager

Franklin is based in San Mateo, CA, and is the manager of TEMGX. The Templeton Global Smaller Companies A made its debut in June of 1981 and TEMGX has managed to accumulate roughly $704.71 million in assets, as of the most recently available information. 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. This fund has delivered a 5-year annualized total return of 1.68%, and is in the bottom 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 8.32%, 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 TEMGX over the past three years is 15.61% compared to the category average of 12.59%. Looking at the past 5 years, the fund's standard deviation is 17.53% compared to the category average of 14.25%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.01, so investors should note that it is hypothetically 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. The fund has produced a negative alpha over the past 5 years of -11.06, 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, TEMGX is a load fund and it has an expense ratio of 1.34%.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment has no minimum amount.

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

Bottom Line

With a 'strong sell' rank, Templeton Global Smaller Companies A is in the bottom 20% of all mutual funds we cover. This means that our models suggest it is one of the worst options for investors in Global - Equity right now, though this could change if the performance of the fund and the Zacks Ranks of the equities in TEMGX turnaround in the next data release.

For additional information on this product, or to compare it to other mutual funds in the Global - Equity, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.