Having trouble finding an Allocation Balanced fund? Well, Franklin Income Adviser (FRIAX - Free Report) would not be a good potential starting point right now. FRIAX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
FRIAX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of FRIAX. The Franklin Income Adviser made its debut in August of 1948 and FRIAX has managed to accumulate roughly $10.96 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 4.91%, and is in the middle 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 3.56%, which places it in the middle 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 FRIAX over the past three years is 8.15% compared to the category average of 8.39%. The standard deviation of the fund over the past 5 years is 7.74% compared to the category average of 8.29%. This makes the fund less volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. FRIAX lost 39.16% in the most recent bear market and underperformed comparable funds by 2.98%. This might suggest that the fund is a worse choice than its peers during a bear market.
Investors should note that the fund has a 5-year beta of 0.66, so it is likely going to be less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -3.37. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, FRIAX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 0.90%. So, FRIAX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Overall, Franklin Income Adviser has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Franklin Income Adviser looks like a somewhat weak choice for investors right now.
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