FISCX
Franklin Convertible Securities-A
Introduction to Franklin Convertible Securities-A
Franklin Convertible Securities-A (FISCX) is a mutual fund designed to maximize total return by optimizing capital appreciation and high current income. The fund primarily invests in convertible securities, which offer a unique blend of equity and fixed-income characteristics. Managed by Franklin Templeton Investments, FISCX aims to provide investors with a balanced approach to growth and income, making it suitable for those seeking moderate risk exposure. With an expense ratio of 0.82%, the fund is competitively priced within its category, offering investors a cost-effective way to access convertible securities.
At A Glance
Executive Summary
FISCX offers a unique blend of capital appreciation and income through convertible securities, with a competitive expense ratio of 0.82%.
Focus on convertible securities for balanced growth and income. Competitive expense ratio compared to peers. Strong historical performance with 27.79% 1-year return.
High correlation with benchmark may limit diversification. Lower yield compared to similar funds. Negative risk metrics like Sharpe and Treynor ratios.
Performance Amidst Market Conditions
FISCX has demonstrated impressive performance over the past year, with a 1-year return of 27.79%, significantly outperforming its benchmark, the S&P 500 Total Return Index, which returned 37.62%. Despite the fund’s lower yield of 0.91%, its focus on capital appreciation has been a key driver of its returns. The fund’s annualized returns over five and ten years are 11.99% and 10.89%, respectively, showcasing its ability to deliver consistent performance over the long term. However, investors should be aware of the fund’s negative risk metrics, such as a Sharpe Ratio of -1.22 and a Treynor Ratio of -17.00, which indicate potential volatility and risk.
Portfolio Composition and Sector Allocation
FISCX’s portfolio is heavily weighted towards convertible securities, with 96.90% of its bond sector allocation in corporate bonds. The fund’s top holdings include prominent names like Alibaba Group Holding Ltd. and Guidewire Software Inc., reflecting a strategic focus on high-growth companies. Interestingly, the fund’s sector allocation is entirely in utilities, which may provide stability but also limits diversification across other sectors. This concentrated approach could appeal to investors seeking exposure to specific industries but may pose risks if these sectors underperform.
Comparative Analysis with Similar Funds
When compared to similar funds such as Lord Abbett Convertible-A (LACFX) and Putnam Convertible Securities-A (PCONX), FISCX holds its ground with a competitive expense ratio of 0.82%. However, its yield of 0.91% is lower than that of its peers, such as Harbor Convertible Securities-Inst (HACSX), which offers a yield of 2.86%. Despite this, FISCX’s strong 1-year return of 27.79% surpasses many of its competitors, highlighting its potential for capital appreciation. Investors should weigh these factors when considering FISCX against other convertible securities funds.
Risk Metrics and Volatility Considerations
FISCX exhibits a beta of 0.58, indicating lower volatility compared to the broader market. However, its negative alpha of -9.87% suggests that the fund has underperformed relative to its benchmark on a risk-adjusted basis. The fund’s standard deviation of 2.33% and max drawdown of -4.3% reflect moderate volatility, which may be suitable for investors with a balanced risk appetite. Despite these challenges, the fund’s correlation with the benchmark at 88.54% suggests that it closely follows market trends, which could be advantageous during periods of market growth.
Investor Suitability and Strategic Fit
FISCX is well-suited for investors seeking a blend of growth and income through convertible securities. Its focus on capital appreciation, combined with a moderate yield, makes it an attractive option for those looking to diversify their portfolios with a unique asset class. The fund’s competitive expense ratio further enhances its appeal, offering cost-effective access to convertible securities. However, investors should consider the fund’s risk metrics and sector concentration when evaluating its fit within their overall investment strategy.
Max Drawdown and Recovery Analysis
The fund experienced a max drawdown of -4.3% between July and August 2024, with a quick recovery, indicating resilience in volatile market conditions. This drawdown was relatively short-lived, with a recovery length of zero, suggesting that the fund was able to bounce back swiftly. This characteristic may appeal to investors who prioritize funds with the ability to recover quickly from market downturns. However, the fund’s downside risk, as indicated by a downside risk (UI) of 1.21, should be considered when assessing its overall risk profile.
Conclusion: A Balanced Approach to Convertible Securities
Franklin Convertible Securities-A (FISCX) stands out as a compelling option for investors seeking a balanced approach to growth and income through convertible securities. Its strong historical performance, competitive expense ratio, and strategic focus on high-growth companies make it an attractive choice for those with a moderate risk tolerance. However, potential investors should carefully consider the fund’s risk metrics and sector concentration before making an investment decision. Overall, FISCX offers a unique opportunity to capitalize on the benefits of convertible securities within a diversified investment portfolio.
Similar Securities
CNSAX: Invesco Convertible Securities-A | Convertible Bond Fund Analysis
CNSAX offers a unique blend of income and growth with a focus on convertible securities, featuring a competitive yield and diversified holdings.
FISCX: Franklin Convertible Securities-A | Convertible Bond Fund Analysis
FISCX offers a unique blend of capital appreciation and income through convertible securities, with a competitive expense ratio of 0.82%.
PCONX: Putnam Convertible Securities-A | Growth and Income with Convertibles
PCONX offers a unique blend of growth and income through U.S. convertible securities, with a focus on capital conservation and a 1.05% expense ratio.
Futher Reading
https://finance.yahoo.com/quote/FISCX/”>Yahoo: Franklin Convertible Securities-A
https://ftcloud.fasttrack.net/web/chart/FISCX
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