FLRMX
2020 Franklin LifeSmart Retrmnt Trgt-A
Strategic Asset Allocation for Near-Retirees
The 2020 Franklin LifeSmart Retirement Target-A (FLRMX) is designed for investors nearing retirement, aiming to provide a balanced approach to asset allocation. As a Target Date-2020s fund, it strategically shifts its asset mix to reduce risk as the target date approaches. This fund is particularly suitable for those who plan to retire around the year 2020 and are looking to minimize new investments. Managed by Franklin Templeton Investments, FLRMX focuses on achieving the highest level of long-term total return consistent with its asset allocation strategy. The fund’s approach is tailored to balance growth and income, making it an attractive option for investors seeking stability in their retirement years.
At A Glance
Executive Summary
FLRMX offers strategic asset allocation for near-retirees with a 0.70% expense ratio, focusing on balanced growth and income.
Strategic asset allocation for near-retirees Balanced growth and income Managed by Franklin Templeton Investments
Higher expense ratio compared to peers Negative alpha and Sharpe ratio Limited upside potential
Performance Analysis: Navigating Market Challenges
FLRMX has demonstrated resilience in a challenging market environment, with a one-year return of 17.24%. However, its performance over longer periods, such as the three-year annualized return of 1.23%, indicates some volatility. The fund’s performance is benchmarked against the S&P 500 Total Return Index, which had a one-year return of 37.62%. This comparison highlights the fund’s conservative approach, which may not capture the full upside of a bull market but offers protection during downturns. The fund’s negative alpha of -20.42% and Sharpe ratio of -2.94 suggest that it has underperformed relative to its risk-adjusted expectations, a critical consideration for potential investors.
Portfolio Composition: A Diverse Mix of Assets
FLRMX’s portfolio is diversified across various asset classes, with a significant allocation to bonds (50.14%) and U.S. equities (30.03%). This mix is designed to provide a balance between income generation and capital appreciation. The top holdings include Franklin U.S. Core Bond ETF and Franklin U.S. Core Equity Advisor, which together account for a substantial portion of the portfolio. The fund also invests in international equities and other asset classes, offering exposure to global markets. This diversification is intended to mitigate risk and enhance returns, aligning with the fund’s objective of achieving a balanced asset allocation for near-retirees.
Sector Allocation: Emphasizing Technology and Financials
The sector allocation of FLRMX reveals a strong emphasis on technology (25.72%) and financials (14.60%), reflecting a strategic focus on sectors with growth potential. The fund also allocates resources to health care (12.40%) and industrials (11.19%), providing a well-rounded exposure to various economic sectors. This allocation strategy is designed to capitalize on sector-specific growth opportunities while maintaining a diversified portfolio. The inclusion of defensive sectors such as utilities and real estate further enhances the fund’s stability, making it a suitable choice for investors seeking a balanced approach to sector exposure.
Risk Metrics: Understanding the Fund’s Volatility
FLRMX exhibits a beta of 0.48, indicating lower volatility compared to the broader market. This low beta is consistent with the fund’s objective of providing a stable investment option for near-retirees. However, the fund’s negative alpha and Sharpe ratio highlight challenges in delivering risk-adjusted returns. The standard deviation of 2.00% suggests moderate volatility, while the downside risk (UI) of 1.12 indicates a relatively low potential for loss. Investors should consider these risk metrics when evaluating the fund’s suitability for their portfolio, particularly if they prioritize stability over high returns.
Comparative Analysis: Evaluating Similar Funds
When compared to similar funds, FLRMX’s expense ratio of 0.70% is higher than some peers, such as the 2020 TRPrice Retirement Income (TRLAX) with an expense ratio of 0.52%. However, FLRMX offers a competitive yield of 2.54%, which is attractive for income-focused investors. The fund’s beta of 0.48 is comparable to its peers, indicating similar levels of market risk. While FLRMX’s one-year return of 17.24% is respectable, it falls short of some competitors like the 2030 Putnam Retirement Advantage-A (PDLTX), which achieved a 20.80% return. This comparative analysis helps investors understand where FLRMX stands in relation to other options in the target date category.
Max Drawdown and Recovery: Resilience in Adverse Conditions
FLRMX experienced a maximum drawdown of -3.8%, with a quick recovery length of just one period. This resilience in adverse market conditions is a testament to the fund’s strategic asset allocation and risk management practices. The drawdown occurred between March and April 2024, a period marked by market volatility. The fund’s ability to recover swiftly from this drawdown is indicative of its robust portfolio management and diversified asset base. For investors concerned about market downturns, FLRMX’s performance during this period provides reassurance of its capacity to withstand and recover from financial stress.
Conclusion: A Balanced Choice for Near-Retirees
In conclusion, the 2020 Franklin LifeSmart Retirement Target-A (FLRMX) offers a strategic asset allocation tailored for investors nearing retirement. Its focus on balancing growth and income, coupled with a diversified portfolio, makes it a compelling choice for those seeking stability in their retirement years. While the fund’s higher expense ratio and negative risk-adjusted returns may be a concern for some, its resilience in market downturns and competitive yield provide a strong case for consideration. FLRMX is best suited for investors who prioritize a balanced approach to asset allocation and are comfortable with moderate risk in exchange for potential income and capital preservation.
Similar Securities
TRLAX: 2020 TRPrice Retirement Income | Diversified Retirement Fund
TRLAX offers a diversified portfolio with a 5.21% yield, ideal for retirees seeking income. Its 0.52% expense ratio is competitive.
PRRPX: 2025 Putnam Sustainable Retirement-Y | Balanced Income & Growth
PRRPX offers a low expense ratio of 0.18% and a yield of 3.11%, focusing on income as 2025 approaches, suitable for conservative investors.
RACTX: 2020 American Funds Trgt Date Retire-R1 | Targeted Retirement Investment
RACTX offers a diversified portfolio for 2020 retirees, focusing on growth, income, and capital conservation with a 1.40% expense ratio.
PAJRX: 2025 TRPrice Target-Adv | Balanced Growth and Income for Retirement
PAJRX offers a balanced approach with a 0.76% expense ratio, focusing on growth and income for retirement investors.
FLRFX: 2025 Franklin LifeSmart Retirement Target-Adv | Diversified Asset Allocation for Retirement
FLRFX offers a balanced approach to retirement investing with a 0.45% expense ratio and diversified holdings across equities and bonds.
Futher Reading
https://www.morningstar.com/funds/xnas/FLRMX/quote
https://finance.yahoo.com/quote/FLRMX/”>Yahoo: 2020 Franklin LifeSmart Retrmnt Trgt-A
https://ftcloud.fasttrack.net/web/chart/FLRMX
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