Have you been searching for an International Bond - Developed fund? You might want to begin with Templeton Global Bond A (TPINX - Free Report) . TPINX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes TPINX as International Bond - Developed, a segment that is packed with options. Focusing on fixed income securities outside from developed nations besides the U.S. International Bond - Developed funds invest in assets from countries like Japan, Germany, the UK, France, and Australia. These holdings dominate the top holdings, and funds in this category offer geographic diversification; however, they can also introduce currency risk.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of TPINX. Templeton Global Bond A debuted in September of 1986. Since then, TPINX has accumulated assets of about $9.36 billion, according to the most recently available information. The fund is currently managed by Michael Hasenstab who has been in charge of the fund since December of 2001.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 1.36%, and is in the middle 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 0.89%, 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. TPINX's standard deviation over the past three years is 6.7% compared to the category average of 7.89%. The standard deviation of the fund over the past 5 years is 5.98% compared to the category average of 7.73%. This makes the fund less volatile than its peers over the past half-decade.
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. TPINX has a modified duration of -0.34, which suggests that the fund will decline -0.34% for every hundred-basis-point increase in interest rates.
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 8.92% means that a $10,000 investment should result in a yearly payout of $892.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of -0.03, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, TPINX has a positive alpha of 1.17, which measures performance on a risk-adjusted basis.
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, TPINX has 62.94% in medium quality bonds, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 29.19%, giving TPINX an average quality of BBB. This means that it focuses on medium quality securities.
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, TPINX is a load fund. It has an expense ratio of 0.89% compared to the category average of 1.01%. So, TPINX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $1,000, investors should also note that there is no minimum for each subsequent investment.
Overall, Templeton Global Bond A (has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Templeton Global Bond A looks like a somewhat average choice for investors right now.
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