FFACX
Franklin Global Allocation-C
Global Diversification with a Balanced Approach
Franklin Global Allocation-C (FFACX) is designed to provide investors with a diversified portfolio that spans both U.S. and international markets. The fund’s primary goal is capital appreciation, with a secondary focus on generating income. This dual objective is achieved through a strategic allocation across various Franklin Templeton mutual funds, which invest in a mix of equity securities and a smaller portion of fixed income and money market instruments. The fund’s global reach and balanced asset allocation make it an attractive option for investors seeking exposure to a wide range of markets while maintaining a focus on growth and income.
At A Glance
Executive Summary
FFACX offers global diversification with a focus on capital appreciation and income. High expense ratio but strong 1-year return of 21.35%.
Global diversification with U.S. and foreign equities Focus on capital appreciation and income Strong recent performance with 21.35% 1-year return
High expense ratio of 1.72% Negative risk metrics like Sharpe Ratio Lower yield compared to peers
Performance Analysis: A Strong Year
FFACX has demonstrated impressive performance over the past year, with a 1-year return of 21.35%. This is particularly noteworthy when compared to its benchmark, the S&P 500 Total Return Index, which posted a 1-year return of 37.62%. While the fund’s return is lower than the benchmark, it still represents a strong performance in the context of its diversified global strategy. The fund’s annualized returns over longer periods, such as five years (4.97%) and ten years (4.08%), indicate consistent growth, albeit at a more moderate pace. This performance suggests that FFACX is well-suited for investors looking for steady, long-term capital appreciation.
Sector and Asset Allocation: A Technology-Heavy Portfolio
The sector allocation of FFACX reveals a significant emphasis on technology, which comprises 28.49% of the portfolio. This is followed by healthcare (13.87%) and financials (12.07%), indicating a strong tilt towards sectors with growth potential. The fund’s asset class allocation further highlights its focus on equities, with U.S. equities making up 39.78% and non-U.S. equities accounting for 21.27% of the portfolio. Bonds constitute 29.63%, providing a degree of stability and income. This allocation strategy reflects the fund’s objective of capital appreciation while maintaining a balanced approach to risk and reward.
Risk Metrics: Navigating Volatility
FFACX’s risk metrics present a mixed picture. The fund has a beta of 0.63, indicating lower volatility compared to the benchmark. However, its negative alpha of -16.31% and Sharpe Ratio of -1.97 suggest that the fund has underperformed on a risk-adjusted basis. The standard deviation of 2.39% and a Treynor Ratio of -26.09 further highlight the challenges in achieving optimal risk-adjusted returns. Despite these metrics, the fund’s downside risk is relatively contained, with a downside risk (UI) of 1.37 and a max drawdown of -5.1%. These figures suggest that while the fund has faced challenges, it has managed to limit losses during market downturns.
Comparative Analysis: Expense and Yield Considerations
When compared to similar funds, FFACX’s expense ratio of 1.72% is relatively high, which could be a concern for cost-conscious investors. In contrast, similar funds like Meeder Balanced-Ret (FLDFX) and WOA All Asset I-I (WOAIX) offer lower expense ratios of 0.0149 and 0.0151, respectively. Additionally, FFACX’s yield of 0.61% is lower than some of its peers, such as WOAIX, which offers a yield of 2.30%. These factors may influence investors who prioritize cost efficiency and income generation. However, FFACX’s strong recent performance may offset these concerns for those focused on capital appreciation.
Top Holdings: A Blend of Equities and Fixed Income
The top holdings of FFACX provide insight into its investment strategy. The fund’s largest holding is the Franklin IFT Money Market (INFXX) at 5.57%, followed by major technology companies like Apple Inc (3.15%) and Microsoft Corp (2.48%). Other notable holdings include NVIDIA Corp (2.41%) and Germany’s government bonds (2.34%). This blend of equities and fixed income securities reflects the fund’s balanced approach, aiming to capture growth opportunities while providing a cushion against market volatility. The presence of high-profile tech stocks underscores the fund’s focus on sectors with strong growth potential.
Market Cap and Geographic Exposure
FFACX’s market cap allocation is skewed towards extra-large companies, which make up 30.77% of the portfolio. This focus on large-cap stocks is complemented by medium-cap (11.83%) and small-cap (1.14%) allocations, providing a diversified exposure across different company sizes. Geographically, the fund invests in both U.S. and foreign equities, with a notable portion allocated to non-U.S. equities (21.27%). This international exposure allows investors to benefit from global market opportunities and diversify their risk beyond domestic markets. The fund’s strategic allocation across various market caps and geographies aligns with its objective of achieving capital appreciation through a diversified approach.
Conclusion: A Strategic Choice for Diversified Growth
In conclusion, Franklin Global Allocation-C (FFACX) stands out as a strategic choice for investors seeking diversified growth with a focus on both capital appreciation and income. Despite its high expense ratio and some negative risk metrics, the fund’s strong recent performance and balanced asset allocation make it a compelling option for those looking to invest in a globally diversified portfolio. Its emphasis on technology and large-cap stocks, combined with international exposure, positions it well for capturing growth opportunities in various markets. FFACX is particularly suitable for investors who prioritize long-term growth and are willing to navigate some volatility for potential higher returns.
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Futher Reading
https://finance.yahoo.com/quote/FFACX/”>Yahoo: Franklin Global Allocation-C
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