LMGEX
Franklin International Equity-C
Global Reach with a Focus on Europe and Japan
Franklin International Equity-C (LMGEX) is designed to provide investors with maximum long-term total return by investing substantially in non-U.S. equity securities. The fund’s primary focus is on the United Kingdom, Europe (excluding the U.K.), and Japan, which are its three largest regional allocations. This strategic allocation allows investors to gain exposure to some of the world’s most developed and stable markets, offering a diversified approach to international investing. The fund’s emphasis on these regions is particularly appealing for investors looking to diversify their portfolios beyond U.S. borders and tap into the growth potential of established international markets.
At A Glance
Executive Summary
LMGEX offers exposure to non-U.S. equities with a focus on Europe and Japan, but has a high expense ratio and underperforms its benchmark.
Global diversification with non-U.S. equities Focus on large-cap international stocks Exposure to diverse sectors like Financials and Industrials
High expense ratio compared to peers Underperformance relative to benchmark Negative risk-adjusted returns
Sector Diversification: A Balanced Approach
LMGEX offers a well-diversified sector allocation, with significant investments in Financials (18.57%), Industrials (17.19%), and Health Care (13.48%). This balanced approach ensures that the fund is not overly reliant on any single sector, which can help mitigate risks associated with sector-specific downturns. The fund’s exposure to Technology (9.37%) and Cyclical sectors (11.74%) also positions it to benefit from economic growth and innovation trends. By maintaining a diversified sector allocation, LMGEX aims to provide stable returns while capitalizing on opportunities across various industries.
Performance Analysis: A Mixed Bag
The performance of LMGEX has been mixed, with a 1-year return of 14.14%, which is below its benchmark, the MSCI ACWI xUS DivAdj Idx, which returned 17.25% over the same period. The fund’s annualized returns over five years stand at 5.08%, while its inception return is 4.13%. Despite these figures, the fund has struggled with risk-adjusted returns, as indicated by its negative Sharpe Ratio of -0.25 and Treynor Ratio of -2.92. These metrics suggest that the fund has not been able to adequately compensate investors for the risks taken, highlighting a potential area of concern for risk-averse investors.
Expense Ratio: A Considerable Cost
One of the notable aspects of LMGEX is its relatively high expense ratio of 2.05%, which is significantly higher than many of its peers. This high cost can eat into investors’ returns over time, making it a critical consideration for potential investors. When compared to similar funds like PIMCO StocksPLUS Intern’l USDHdgd-C (PIPCX) with an expense ratio of 0.0232%, LMGEX’s cost structure appears less competitive. Investors should weigh the potential benefits of the fund’s international exposure against the impact of its expense ratio on overall returns.
Risk Metrics: Navigating Volatility
LMGEX exhibits a beta of 1.07, indicating that it is slightly more volatile than the market. The fund’s correlation with its benchmark is high at 95.19%, suggesting that its performance closely follows the broader international equity market trends. However, the fund’s negative alpha of -3.13% indicates that it has underperformed its benchmark on a risk-adjusted basis. The standard deviation of 3.67% reflects moderate volatility, while the max drawdown of -8.4% highlights the potential for significant losses during market downturns. These risk metrics underscore the importance of considering the fund’s volatility and potential for underperformance when making investment decisions.
Top Holdings: A Glimpse into the Portfolio
The top holdings of LMGEX provide insight into its investment strategy and focus. The fund’s largest positions include Novo Nordisk AS Class B (2.71%), ASML Holding NV (2.16%), and Novartis AG Registered Shares (1.88%). These companies are leaders in their respective industries, offering strong growth potential and stability. The presence of major firms like SAP SE and Roche Holding AG further emphasizes the fund’s focus on established, high-quality companies. This selection of top holdings reflects the fund’s strategy of investing in large-cap international stocks, which can provide a balance of growth and stability for investors.
Comparative Analysis: How LMGEX Stacks Up
When compared to similar funds, LMGEX faces stiff competition. For instance, PIMCO StocksPLUS Intern’l USDHdgd-C (PIPCX) boasts a 1-year return of 19.16% and a much lower expense ratio of 0.0232%. Similarly, American Funds Europacific Growth-C (AEPCX) and Mundoval (MUNDX) also offer competitive returns and lower costs. These comparisons highlight the challenges LMGEX faces in terms of performance and cost-effectiveness. Investors considering LMGEX should carefully evaluate these factors and consider whether the fund’s specific regional and sector focus aligns with their investment goals.
Conclusion: Is LMGEX Right for You?
Franklin International Equity-C (LMGEX) offers a unique opportunity for investors seeking exposure to non-U.S. equities, particularly in Europe and Japan. However, its high expense ratio and underperformance relative to its benchmark may deter some investors. The fund’s diversified sector allocation and focus on large-cap international stocks provide a degree of stability, but the negative risk-adjusted returns and potential for volatility are important considerations. LMGEX may be suitable for investors who prioritize global diversification and are willing to accept higher costs for the potential benefits of international exposure. As always, investors should assess their risk tolerance and investment objectives before making a decision.
Similar Securities
BDOAX: iShares MSCI Total Intern'l IxFd-InvA | Global Diversification with BlackRock
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MAILX: BlackRock International-Inst | Global Equity Growth Fund
MAILX offers diversified global equity exposure with a competitive expense ratio of 0.66%, focusing on long-term growth outside the US.
SBIEX: ClearBridge International Value-A | Diversified Non-US Equity Fund
SBIEX offers diversified non-US equity exposure with a 3.90% yield, suitable for value-focused investors seeking international diversification.
HDAVX: Janus Henderson Responsible Int'l Div-A | High Yield Global Value Fund
HDAVX offers a 2.07% yield with a focus on global value stocks, outperforming its benchmark with a 19.49% 1-year return.
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.
Futher Reading
https://finance.yahoo.com/quote/LMGEX/”>Yahoo: Franklin International Equity-C
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