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Is Franklin DynaTech A (FKDNX) a Strong Mutual Fund Pick Right Now?

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Sector - Tech fund seekers should consider taking a look at Franklin DynaTech A (FKDNX - Free Report) . FKDNX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FKDNX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.

History of Fund/Manager

Franklin Templeton is based in San Mateo, CA, and is the manager of FKDNX. The Franklin DynaTech A made its debut in January of 1968 and FKDNX has managed to accumulate roughly $5.56 billion in assets, as of the most recently available information. The fund is currently managed by Rupert H. Johnson Jr. who has been in charge of the fund since January of 1968.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 17.65%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 24.28%, which places it in the top 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. Compared to the category average of 10.92%, the standard deviation of FKDNX over the past three years is 15.48%. The fund's standard deviation over the past 5 years is 15.29% compared to the category average of 11.16%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. FKDNX lost 47.2% in the most recent bear market and outperformed its peer group by 7%. This means that the fund could possibly be a better choice than its peers during a down market environment.

Investors should note that the fund has a 5-year beta of 1.1, so it is likely going to be more 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 positive alpha over the past 5 years of 4.04, which shows that managers in this portfolio are skilled in picking 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, FKDNX is a load fund. It has an expense ratio of 0.85% compared to the category average of 1.39%. So, FKDNX is actually cheaper than its peers from a cost perspective.

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

Bottom Line

Overall, Franklin DynaTech A ( FKDNX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Franklin DynaTech A ( FKDNX ) looks like a good potential choice for investors right now.

For additional information on the Sector - Tech area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FKDNX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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