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Is Templeton Global Smaller Companies A (TEMGX) a Strong Mutual Fund Pick Right Now?

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Looking for a Global - Equity fund? You may want to consider Templeton Global Smaller Companies A (TEMGX - Free Report) as a possible option. TEMGX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine 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 Templeton is based in San Mateo, CA, and is the manager of TEMGX. Templeton Global Smaller Companies A debuted in June of 1981. Since then, TEMGX has accumulated assets of about $1.06 billion, according to the most recently available information. Harlan B. Hodes is the fund's current manager and has held that role since December of 2007.

Performance

Investors naturally seek funds with strong performance. TEMGX has a 5-year annualized total return of 4.89% and is in the bottom 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 8.01%, which places it in the bottom 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. TEMGX's standard deviation over the past three years is 13.01% compared to the category average of 10.22%. The fund's standard deviation over the past 5 years is 13.02% compared to the category average of 10.25%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In TEMGX's case, the fund lost 62.2% in the most recent bear market and underperformed its peer group by 9%. This might suggest that the fund is a worse choice than its peers during a bear market.

Even still, the fund has a 5-year beta of 0.96, so investors should note that 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. With a negative alpha of -5.01, 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. It has an expense ratio of 1.33% compared to the category average of 1.19%. Looking at the fund from a cost perspective, TEMGX is actually more expensive than its peers.

While the minimum initial investment for the product is $1,000, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Templeton Global Smaller Companies A ( TEMGX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, this fund looks like a somewhat average choice for investors right now.

Want even more information about TEMGX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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