FCENX
Franklin International Core Equity-Adv
Strategic Focus on Non-U.S. Equities
Franklin International Core Equity-Adv (FCENX) is designed to provide investors with capital appreciation by focusing on non-U.S. equity securities. The fund invests at least 80% of its net assets in equity securities, predominantly in non-U.S. issuers. This strategic focus allows investors to gain exposure to international markets, which can offer diversification benefits and potential growth opportunities. The fund’s investable universe typically includes companies within the MSCI EAFE Index, providing a broad range of investment opportunities across various sectors and regions. This focus on foreign equities makes FCENX an attractive option for investors looking to diversify their portfolios beyond domestic markets.
At A Glance
Executive Summary
FCENX offers low-cost exposure to non-U.S. equities with a 0.02% expense ratio, focusing on large-cap stocks for capital appreciation.
Low expense ratio of 0.02% enhances returns. Strong focus on non-U.S. large-cap equities. High yield of 3.62% for income-seeking investors.
Negative alpha indicates underperformance. High beta of 1.11 suggests increased volatility. Limited exposure to small-cap stocks.
Impressive Yield and Income Potential
One of the standout features of FCENX is its impressive yield of 3.62%, which is notably higher than many of its peers. This high yield makes the fund particularly appealing to income-focused investors who are looking for regular income streams from their investments. The fund’s ability to generate such a yield is a testament to its strategic selection of dividend-paying stocks within its portfolio. This focus on income generation, combined with the potential for capital appreciation, positions FCENX as a compelling choice for investors seeking a balanced approach to growth and income.
Low Expense Ratio Enhances Returns
FCENX boasts an exceptionally low expense ratio of 0.02%, which is a significant advantage for investors. A lower expense ratio means that more of the fund’s returns are passed on to investors, rather than being consumed by management fees. This cost efficiency is particularly important in the context of long-term investing, where even small differences in fees can have a substantial impact on overall returns. By keeping costs low, FCENX enhances its appeal to cost-conscious investors who are looking to maximize their investment returns over time.
Sector and Market Cap Diversification
The fund’s portfolio is well-diversified across various sectors and market capitalizations, which helps to mitigate risk and enhance potential returns. FCENX has significant allocations in the financial (18.67%), industrials (17.99%), and healthcare (13.59%) sectors, providing exposure to industries with strong growth potential. Additionally, the fund’s market cap allocation is skewed towards large-cap (43.94%) and extra-large-cap (36.52%) stocks, which are typically more stable and less volatile than smaller-cap stocks. This diversification strategy not only reduces risk but also positions the fund to capitalize on opportunities across different sectors and market conditions.
Performance Analysis and Benchmark Comparison
In terms of performance, FCENX has delivered a 1-year return of 16.62%, which is slightly below its benchmark, the MSCI ACWI xUS DivAdj Index, which returned 17.25% over the same period. While the fund’s performance is commendable, it is important to note that its alpha is negative at -0.65%, indicating that it has underperformed its benchmark on a risk-adjusted basis. However, the fund’s beta of 1.11 suggests that it is more volatile than the market, which could lead to higher returns in bullish market conditions. Investors should weigh these factors when considering FCENX as part of their investment strategy.
Risk Metrics and Volatility Considerations
FCENX exhibits a beta of 1.11, indicating that it is more volatile than the market. This higher volatility can be a double-edged sword, offering the potential for higher returns during market upswings but also posing greater risk during downturns. The fund’s standard deviation of 3.82% and a max drawdown of -8.5% further highlight its risk profile. Additionally, the fund’s Sharpe ratio of -0.05 and Treynor ratio of -0.58 suggest that it has not been able to generate positive risk-adjusted returns. Investors should consider their risk tolerance and investment horizon when evaluating FCENX, as its volatility may not be suitable for all investors.
Competitive Positioning and Peer Comparison
When compared to similar funds, FCENX holds its ground with a competitive yield and low expense ratio. For instance, while the Fidelity ZERO International Index Fund (FZILX) offers a slightly higher 1-year return of 16.94%, FCENX’s yield of 3.62% surpasses FZILX’s 2.80%. Additionally, FCENX’s expense ratio of 0.02% is competitive, though slightly higher than FZILX’s zero expense ratio. These comparisons highlight FCENX’s strengths in income generation and cost efficiency, making it a strong contender in the foreign-large category. Investors should consider these factors alongside their investment goals when choosing between FCENX and its peers.
Conclusion: A Balanced Approach to International Investing
In conclusion, Franklin International Core Equity-Adv (FCENX) stands out as a compelling option for investors seeking exposure to non-U.S. equities with a focus on large-cap stocks. Its low expense ratio and high yield make it particularly attractive for cost-conscious, income-focused investors. However, its higher volatility and negative alpha suggest that it may not be suitable for all risk profiles. Overall, FCENX offers a balanced approach to international investing, providing both growth potential and income generation. Investors should carefully consider their investment objectives and risk tolerance when evaluating FCENX as part of their portfolio.
Similar Securities
TROSX: TRPrice Overseas Stock-Inv | Global Growth Opportunities
TROSX offers exposure to non-U.S. large-cap stocks with a 2.20% yield and competitive 0.78% expense ratio, ideal for growth-focused investors.
JAIGX: Janus Henderson VIT Overseas-Inst | Global Growth Opportunities
JAIGX offers global exposure with a focus on emerging markets, leveraging a bottom-up approach. Competitive expense ratio and diverse holdings.
AIIEX: Invesco EQV International Equity-A | International Growth Opportunities
AIIEX offers international growth with a focus on strong earnings momentum, featuring a diversified portfolio and competitive returns.
TRIGX: T. Rowe Price International Value Equity | Foreign-Large Value Fund
TRIGX offers a blend of growth and value in large-cap foreign stocks with a competitive 0.85% expense ratio and 2.47% yield.
HFQAX: Janus Henderson Global Equity Income-A | High Income & Growth
HFQAX offers a high 7.83% yield with a focus on income-producing equities, suitable for value investors seeking global exposure.
Futher Reading
https://www.morningstar.com/funds/xnas/FCENX/quote
https://finance.yahoo.com/quote/FCENX/”>Yahoo: Franklin International Core Equity-Adv
https://ftcloud.fasttrack.net/web/chart/FCENX
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