FBLAX
Franklin Managed Income-A
A Balanced Approach to Income and Growth
Franklin Managed Income-A (FBLAX) is designed to provide investors with a balanced approach to income and capital appreciation. The fund achieves this by investing in a diversified portfolio that includes dividend-paying stocks, convertible securities, and fixed income securities. With a mandate to allocate at least 25% of its total assets to fixed income securities, FBLAX offers a stable income stream while also seeking growth opportunities through equity investments. This balanced strategy makes it an attractive option for investors looking for a moderate-risk investment that can provide both income and growth potential.
At A Glance
Executive Summary
FBLAX offers a balanced approach with a 4.43% yield and diversified holdings, ideal for moderate-risk investors seeking income and growth.
Balanced exposure to stocks and bonds Attractive 4.43% yield Diversified sector allocation
Higher expense ratio at 0.90% Negative alpha and Sharpe ratio Limited upside potential
Sector Allocation: A Diverse Portfolio
FBLAX’s sector allocation is a testament to its diversified investment strategy. The fund has significant exposure to utilities (15.82%), health care (15.01%), and energy (13.37%), which are sectors known for their stability and income-generating potential. Additionally, the fund invests in technology (10.05%) and financials (12.75%), providing exposure to sectors with growth potential. This diverse sector allocation helps mitigate risk by spreading investments across various industries, making FBLAX a well-rounded choice for investors seeking a balanced portfolio.
Performance Metrics: A Mixed Bag
The performance metrics of FBLAX present a mixed picture. While the fund has achieved a respectable 16.88% return over the past year, its long-term performance is more modest, with a 5.86% return over ten years. The fund’s alpha of -20.78% and Sharpe ratio of -3.37 indicate that it has underperformed its benchmark, the S&P 500 Total Return Index, on a risk-adjusted basis. However, its low beta of 0.36 suggests that FBLAX is less volatile than the market, which may appeal to risk-averse investors. Despite these challenges, the fund’s 4.43% yield remains an attractive feature for income-focused investors.
Top Holdings: A Focus on Stability
FBLAX’s top holdings reflect its focus on stability and income generation. The fund’s largest positions include U.S. Treasury Bond Stripped Principal Payment, Chevron Corp, and Exxon Mobil Corp, which are known for their reliable income streams. Additionally, the fund holds significant positions in The Home Depot Inc and Johnson & Johnson, companies with strong market positions and consistent dividend payouts. This focus on stable, income-generating assets aligns with the fund’s objective of providing both income and capital appreciation, making it a suitable choice for investors seeking a balanced approach.
Comparative Analysis: Standing Out Among Peers
When compared to similar funds, FBLAX offers a competitive yield of 4.43%, which is higher than many of its peers, such as GuideStone Defensive Markets Strats-Inv (GDMZX) and Port Street Quality Growth-Inst (PSQGX). However, its expense ratio of 0.90% is higher than those of its peers, which may be a consideration for cost-conscious investors. Despite this, FBLAX’s diversified portfolio and balanced approach to income and growth make it a compelling option for investors seeking a moderate-risk investment. Its performance over the past year also compares favorably with peers, although its long-term returns are more modest.
Risk Metrics: Understanding the Downside
FBLAX’s risk metrics highlight some areas of concern for potential investors. The fund’s negative alpha and Sharpe ratio suggest that it has not effectively compensated investors for the risks taken. Additionally, the fund’s upside potential is limited, as indicated by its upside potential metric of -20.84. However, the fund’s low beta of 0.36 and downside risk (UI) of 1.00 suggest that it is less volatile than the broader market, which may appeal to conservative investors. Understanding these risk metrics is crucial for investors considering FBLAX, as they provide insight into the fund’s risk-return profile.
Asset Allocation: A Balanced Mix
FBLAX’s asset allocation reflects its balanced investment strategy, with 54.53% of assets in bonds and 35.75% in U.S. equities. This mix provides a stable income stream from fixed income securities while also offering growth potential through equity investments. The fund’s allocation to cash (2.02%) and non-U.S. equities (1.77%) further diversifies its portfolio, reducing risk and enhancing potential returns. This balanced asset allocation makes FBLAX an attractive option for investors seeking a moderate-risk investment that offers both income and growth potential.
Conclusion: A Suitable Choice for Moderate-Risk Investors
In conclusion, Franklin Managed Income-A (FBLAX) stands out as a balanced fund that offers both income and growth potential. Its diversified portfolio, attractive yield, and balanced asset allocation make it a suitable choice for moderate-risk investors seeking a stable income stream and capital appreciation. While the fund’s expense ratio is higher than some of its peers, its competitive yield and diversified sector allocation provide compelling reasons to consider FBLAX. Investors looking for a balanced approach to income and growth will find FBLAX to be a well-rounded option that aligns with their investment goals.
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Futher Reading
https://finance.yahoo.com/quote/FBLAX/”>Yahoo: Franklin Managed Income-A
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