FLRHX
2035 Franklin LifeSmart Retrmnt Trgt-Adv
Strategic Asset Allocation for Retirement
The 2035 Franklin LifeSmart Retirement Target-Adv (FLRHX) is designed to provide investors with a strategic asset allocation that evolves over time, aiming for the highest level of long-term total return. This fund is particularly suitable for investors targeting retirement around the year 2035, as it balances growth and income through a diversified mix of equities, fixed-income, and short-term investments. By investing in a combination of Franklin Templeton mutual funds, FLRHX offers a comprehensive approach to asset allocation, ensuring that investors benefit from the expertise and performance of various underlying funds. This strategic allocation is intended to reduce risk as the target date approaches, making it a prudent choice for retirement-focused investors.
At A Glance
Executive Summary
FLRHX offers diversified asset allocation with a 0.45% expense ratio, focusing on long-term growth for retirement investors.
Diversified asset allocation for risk management Competitive expense ratio of 0.45% Strong 1-year return of 23.54%
Negative alpha indicating underperformance High downside risk with a UI of 1.44 Lower Sharpe ratio of -1.52
Performance Analysis: A Year of Strong Returns
FLRHX has demonstrated impressive performance over the past year, with a 1-year return of 23.54%, which is competitive within its category. This performance is particularly noteworthy given the fund’s focus on a balanced asset allocation strategy. While the fund’s 5-year annualized return stands at 8.48%, it is important to note that the fund’s inception return is 6.77%, indicating consistent long-term growth. However, when compared to its benchmark, the S&P 500 Total Return Index, which had a 1-year return of 37.62%, FLRHX’s performance highlights the trade-off between risk and return inherent in its diversified strategy. Investors should consider this performance in the context of their own risk tolerance and investment goals.
Expense Ratio: Competitive Edge in Cost Management
One of the standout features of FLRHX is its competitive expense ratio of 0.45%. This is relatively low compared to many other funds in the target date category, making it an attractive option for cost-conscious investors. Lower expense ratios can significantly impact an investor’s net returns over time, especially in a long-term investment like a retirement fund. By keeping costs low, FLRHX allows investors to retain more of their investment gains, which is crucial for compounding growth over the years. This cost efficiency, combined with the fund’s strategic asset allocation, positions FLRHX as a strong contender for those seeking a balance between cost and performance.
Risk Metrics: Navigating Volatility
FLRHX’s risk metrics provide insight into its performance under varying market conditions. The fund has a beta of 0.70, indicating lower volatility compared to the market, which can be appealing to risk-averse investors. However, the fund’s alpha is -14.12%, suggesting it has underperformed relative to its benchmark on a risk-adjusted basis. The Sharpe ratio of -1.52 further highlights the challenges in achieving returns commensurate with the risk taken. Despite these figures, the fund’s downside risk, measured by a UI of 1.44, is relatively moderate, suggesting that while the fund may not outperform in bull markets, it offers some protection during downturns. Investors should weigh these risk metrics against their own risk tolerance and investment horizon.
Sector and Asset Class Diversification
FLRHX offers a well-diversified portfolio across various sectors and asset classes, which is crucial for managing risk and enhancing potential returns. The fund’s largest sector allocation is in technology, comprising 25.73% of the portfolio, followed by financials at 14.60% and healthcare at 12.40%. This sector diversification allows the fund to capitalize on growth opportunities across different industries. In terms of asset class allocation, the fund holds 46.69% in U.S. equities, 25.93% in non-U.S. equities, and 24.84% in bonds. This mix provides a balance between growth and income, aligning with the fund’s objective of achieving long-term total return. Such diversification is essential for mitigating sector-specific risks and capturing global market opportunities.
Comparative Analysis: Standing Among Peers
When compared to similar funds, FLRHX holds its ground with a strong 1-year return of 23.54%. For instance, the 2035 Schwab Target (SWIRX) and 2035 American Funds Target Date Retire-R5 (REFTX) have similar returns of 23.76% and 23.81%, respectively. However, FLRHX’s expense ratio of 0.45% is slightly higher than some peers, such as REFTX’s 0.40%. Despite this, FLRHX’s diversified asset allocation and strategic management by Franklin Templeton provide a compelling case for investors. The fund’s beta of 0.70 also indicates lower volatility compared to some peers, which may appeal to investors seeking stability. This comparative analysis underscores FLRHX’s competitive positioning in the target date fund landscape.
Max Drawdown and Recovery: Resilience in Adversity
FLRHX experienced a maximum drawdown of -5.7%, with a drawdown length of one month and an immediate recovery. This resilience is indicative of the fund’s ability to withstand market volatility and recover swiftly, which is a critical consideration for investors focused on long-term growth. The fund’s quick recovery from its peak on July 16, 2024, to its valley on August 5, 2024, demonstrates effective risk management and the benefits of its diversified asset allocation. For investors, this resilience provides confidence in the fund’s ability to navigate market downturns while maintaining its strategic focus on long-term returns. Such characteristics are vital for those planning for retirement, where stability and recovery are paramount.
Conclusion: A Strategic Choice for Retirement Planning
In conclusion, the 2035 Franklin LifeSmart Retirement Target-Adv (FLRHX) stands out as a strategic choice for investors planning for retirement around 2035. Its diversified asset allocation, competitive expense ratio, and strong recent performance make it an attractive option for those seeking a balance between growth and income. While the fund’s risk metrics indicate some challenges, its resilience in market downturns and strategic sector diversification provide a solid foundation for long-term investment. FLRHX is particularly suitable for investors who prioritize cost efficiency and a well-rounded approach to asset management, making it a compelling addition to a retirement-focused portfolio.
Similar Securities
LENAX: 2030 BlackRock LifePath ESG IxFd-InvA | ESG-Focused Retirement Fund
LENAX offers ESG-focused asset allocation for 2030 retirees with a 0.5% expense ratio, emphasizing sustainability and moderate risk.
PCDLX: Putnam Retirement Advantage 2035 R6 | Target Date Fund for 2035 Retirees
PCDLX offers a strategic asset allocation for 2035 retirees, with a competitive expense ratio of 0.45% and a yield of 2.83%, focusing on income as retirement nears.
LINAX: 2030 BlackRock LifePath IxFd-InvA | Target Date Fund for 2030 Retirees
LINAX offers a strategic mix of equities and bonds for 2030 retirees, with a competitive 0.39% expense ratio and strong 1-year return of 19.47%.
RAFTX: 2035 American Funds Trgt Date Retire-R1 | Targeted Growth for 2035 Retirees
RAFTX offers a diversified portfolio for 2035 retirees, focusing on growth and income with a 1.45% expense ratio and 22.48% 1-year return.
PRRTX: 2030 Putnam Sustainable Retirement-Y | Balanced Growth and Income
PRRTX offers a low expense ratio of 0.16% and a balanced asset allocation, making it ideal for investors targeting retirement in 2030.
Futher Reading
https://www.morningstar.com/funds/xnas/FLRHX/quote
https://finance.yahoo.com/quote/FLRHX/”>Yahoo: 2035 Franklin LifeSmart Retrmnt Trgt-Adv
https://ftcloud.fasttrack.net/web/chart/FLRHX
https://www.wsj.com/market-data/quotes/mutualfund/FLRHX
Disclaimer: The information provided on this website is for informational purposes only and should not be construed as financial, investment, or other professional advice. PeepFinance does not endorse or recommend any specific securities, investments, or strategies. The opinions expressed are solely those of the authors and are not intended to be used as the basis for any investment decisions. All investments carry risks, and readers are encouraged to conduct their own research or consult with a financial professional before making any financial decisions. PeepFinance and its authors are not responsible for any losses or damages arising from the use of this information.