FMTIX
Franklin Moderate Allocation-A
Balancing Growth and Stability
Franklin Moderate Allocation-A (FMTIX) is designed to provide investors with a balanced approach to growth and stability. As a balanced fund, it aims to achieve the highest level of long-term total return consistent with a moderate level of risk. This makes it particularly suitable for investors with an intermediate investment horizon who are looking for a mix of equity and fixed-income securities. The fund’s strategy involves a diversified asset allocation, with a significant portion invested in U.S. equities (46.84%) and bonds (35.96%), providing a stable foundation for growth while mitigating risk through fixed-income exposure.
At A Glance
Executive Summary
FMTIX offers balanced growth with a moderate risk profile, featuring a diversified portfolio and competitive yield of 1.76%.
Diversified asset allocation for balanced growth; Moderate risk suitable for intermediate investors; Competitive yield of 1.76%.
Higher expense ratio compared to peers; Lower recent performance against benchmark; Negative alpha indicating underperformance.
Performance in Context
The performance of FMTIX over the past year has been notable, with a one-year return of 22.23%. 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 fund’s more conservative approach, which prioritizes risk management over aggressive growth. Despite this, the fund’s five-year annualized return of 7.20% demonstrates its ability to deliver consistent returns over a longer period, aligning with its objective of providing balanced growth.
Portfolio Composition and Sector Allocation
FMTIX’s portfolio is well-diversified across various sectors, with a significant allocation to technology (27.78%), financials (13.57%), and healthcare (12.91%). This sector allocation reflects a strategic emphasis on industries with strong growth potential and stability. Additionally, the fund’s bond sector allocation is heavily weighted towards government securities (40.84%) and corporate bonds (32.84%), which helps to balance the equity exposure and reduce overall portfolio volatility. This diversified approach is designed to provide a stable income stream while capitalizing on growth opportunities in key sectors.
Risk Metrics and Volatility
The risk metrics for FMTIX indicate a moderate risk profile, with a beta of 0.63, suggesting lower volatility compared to the broader market. However, the fund’s negative alpha of -15.43% and Sharpe ratio of -1.87 highlight challenges in achieving risk-adjusted returns. The fund’s standard deviation of 2.38% and downside risk of 1.30% further emphasize its focus on stability. Despite these metrics, the fund’s max drawdown of -4.6% was relatively contained, demonstrating its resilience during market downturns and its ability to recover quickly.
Comparative Analysis with Peers
When compared to similar balanced funds, FMTIX’s performance and expense ratio present a mixed picture. While its one-year return of 22.23% is competitive, it falls short of peers like Tributary Balanced-Inst (FOBAX) with a 23.67% return. Additionally, FMTIX’s expense ratio of 0.84% is higher than some competitors, such as Voya Solution Balanced Port I (ISGJX) with an expense ratio of 0.80%. These factors may influence investors seeking cost-effective options with similar risk profiles. However, FMTIX’s diversified portfolio and moderate risk approach remain attractive for those prioritizing stability.
Yield and Income Potential
FMTIX offers a yield of 1.76%, which is competitive within the balanced fund category. This yield is supported by the fund’s strategic allocation to income-generating assets, including bonds and dividend-paying equities. The fund’s focus on government and corporate bonds, along with its exposure to high-yield corporate ETFs, enhances its income potential. For investors seeking a balance between growth and income, FMTIX provides a reliable option, offering regular income distributions while maintaining a diversified portfolio aimed at long-term capital appreciation.
Suitability for Intermediate Investors
FMTIX is particularly well-suited for investors with an intermediate investment horizon who are seeking a balanced approach to growth and income. Its moderate risk profile and diversified asset allocation make it an ideal choice for those looking to mitigate volatility while still participating in market growth. The fund’s focus on both U.S. and international equities, along with a substantial bond allocation, provides a comprehensive investment strategy that aligns with the needs of investors seeking stability and consistent returns over time.
Conclusion: A Balanced Approach to Investing
In conclusion, Franklin Moderate Allocation-A (FMTIX) stands out as a balanced fund offering a strategic mix of growth and income opportunities. Its diversified portfolio, moderate risk profile, and competitive yield make it an attractive option for intermediate investors. While its expense ratio is higher than some peers, the fund’s focus on stability and consistent returns provides a compelling case for inclusion in a diversified investment portfolio. Investors seeking a balanced approach to asset allocation will find FMTIX to be a valuable addition, offering both growth potential and income generation.
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Futher Reading
https://finance.yahoo.com/quote/FMTIX/”>Yahoo: Franklin Moderate Allocation-A
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