FGTIX
Franklin Growth Allocation-A
Aggressive Growth with Balanced Risk
Franklin Growth Allocation-A (FGTIX) is designed for investors seeking aggressive growth while maintaining a balanced risk profile. As a balanced aggressive fund, it aims to achieve the highest level of long-term total return consistent with a higher level of risk. This makes it particularly suitable for investors with a longer investment horizon who are comfortable with potential market volatility. The fund’s strategy involves a diversified asset allocation across equities and bonds, with a significant portion invested in U.S. equities, which constitute over 61% of the portfolio. This allocation strategy is intended to capitalize on growth opportunities while mitigating risk through diversification.
At A Glance
Executive Summary
FGTIX offers aggressive growth with a balanced approach, featuring a 0.85% expense ratio and a 1.27% yield, ideal for long-term investors.
Aggressive growth potential with balanced risk; Strong technology sector allocation; Suitable for long-term investment horizon
Higher expense ratio compared to peers; Negative alpha and Sharpe ratio; Recent max drawdown of -6.5%
Sector Allocation: A Strong Focus on Technology
FGTIX’s sector allocation reveals a strong emphasis on technology, which comprises 27.82% of the portfolio. This focus aligns with the fund’s aggressive growth strategy, as the technology sector has historically been a significant driver of market returns. Other notable sector allocations include financials at 13.67% and healthcare at 12.87%, providing a balanced exposure to sectors with robust growth potential. The fund’s allocation to cyclical industries, such as industrials and consumer cyclicals, further supports its growth objectives by positioning the portfolio to benefit from economic upturns. This strategic sector allocation is designed to enhance the fund’s performance in growth phases while maintaining a diversified risk profile.
Performance Analysis: Navigating Market Volatility
Over the past year, FGTIX has delivered a remarkable 27% return, showcasing its ability to navigate market volatility effectively. However, when compared to its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return, the fund underperformed. This discrepancy highlights the challenges faced by the fund in capturing the full upside of the market. Despite this, the fund’s performance over longer periods, such as the five-year annualized return of 9.62%, demonstrates its potential for sustained growth. Investors should consider the fund’s performance in the context of its aggressive strategy and the inherent risks associated with such an approach.
Risk Metrics: Understanding the Fund’s Volatility
FGTIX exhibits a beta of 0.79, indicating lower volatility compared to the market, as represented by its benchmark. However, the fund’s negative alpha of -10.66% and Sharpe ratio of -1.05 suggest that it has not effectively compensated investors for the risks taken. The fund’s standard deviation of 2.92% and a max drawdown of -6.5% further illustrate the volatility and potential downside risk associated with its aggressive strategy. These risk metrics underscore the importance of understanding the fund’s risk-return profile, particularly for investors seeking aggressive growth. While the fund’s strategy aims to achieve high returns, it also involves significant risk, which investors must be prepared to accept.
Comparative Analysis: Expense Ratio and Yield
FGTIX’s expense ratio of 0.85% is higher than some of its peers, such as Fidelity Puritan (FPURX) with an expense ratio of 0.47%. This higher cost may impact net returns, especially over the long term. However, the fund offers a yield of 1.27%, which, while modest, provides some income potential for investors. When compared to similar funds like Sit Balanced (SIBAX) and Voya Solution Moderately Agrsv Port I (IAGIX), FGTIX’s yield is slightly lower, but its aggressive growth strategy may offer higher capital appreciation potential. Investors should weigh the fund’s expense ratio and yield against its growth prospects and risk profile when considering it for their portfolio.
Portfolio Composition: Diversified Asset Allocation
The portfolio composition of FGTIX reflects a diversified asset allocation strategy, with a significant emphasis on U.S. equities, which account for 61.60% of the portfolio. This is complemented by non-U.S. equities at 19.18% and bonds at 16.94%, providing a balanced exposure to different asset classes. The fund’s bond allocation includes a mix of corporate and government bonds, which help to stabilize the portfolio and provide income. Additionally, the fund maintains a cash position of 2.15%, offering liquidity and flexibility to capitalize on market opportunities. This diversified approach is designed to achieve the fund’s aggressive growth objectives while managing risk through asset class diversification.
Market Cap Allocation: Emphasizing Large and Extra-Large Caps
FGTIX’s market cap allocation is heavily weighted towards large and extra-large cap stocks, which together constitute over 61% of the portfolio. This focus on larger companies aligns with the fund’s strategy to achieve aggressive growth through investments in established firms with strong market positions. Medium cap stocks also play a significant role, representing 17.05% of the portfolio, providing exposure to companies with high growth potential. The minimal allocation to small cap stocks reflects a cautious approach to risk, as smaller companies can be more volatile. This market cap distribution is intended to balance growth potential with stability, supporting the fund’s long-term growth objectives.
Conclusion: Is FGTIX Right for You?
Franklin Growth Allocation-A (FGTIX) stands out as a compelling option for investors seeking aggressive growth with a balanced risk approach. Its strong focus on technology and diversified asset allocation make it suitable for those with a long-term investment horizon who are comfortable with higher risk. However, potential investors should be mindful of the fund’s higher expense ratio and recent performance challenges compared to its benchmark. For those willing to accept the associated risks, FGTIX offers the potential for significant capital appreciation, making it an attractive choice for growth-oriented investors looking to enhance their portfolio’s performance.
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Futher Reading
https://finance.yahoo.com/quote/FGTIX/”>Yahoo: Franklin Growth Allocation-A
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