SBBAX
Franklin Multi-Asset Conserv Growth-I
Balanced Approach to Growth and Income
The Franklin Multi-Asset Conserv Growth-I (SBBAX) fund is designed to provide a balanced approach to capital growth and income. It primarily invests in U.S. stocks and bonds, with a small allocation to international markets. This strategy aims to offer investors a moderate-risk investment option that balances the potential for capital appreciation with income generation. The fund’s asset allocation is structured to provide stability and growth, making it an attractive option for investors seeking a diversified portfolio that can weather market fluctuations while still offering growth potential.
At A Glance
Executive Summary
SBBAX offers a balanced approach with a 1.92% yield and diversified U.S. stock and bond exposure, suitable for moderate-risk investors.
Balanced exposure to U.S. stocks and bonds Moderate risk with diversified holdings Potential for capital growth and income
Higher expense ratio compared to peers Negative alpha indicating underperformance Limited international exposure
Performance Analysis: A Mixed Bag
SBBAX has shown a mixed performance over various time frames. The fund’s one-year return stands at an impressive 22.46%, outperforming many of its peers. However, its three-year and five-year annualized returns are more modest at 3.34% and 6.48%, respectively. This indicates that while the fund has recently performed well, its longer-term performance has been less consistent. The fund’s alpha of -15.20% suggests it has underperformed its benchmark, the S&P 500 Total Return Index, which may be a concern for potential investors looking for consistent outperformance.
Portfolio Composition: A Diverse Mix
The portfolio of SBBAX is diversified across various asset classes and sectors. The fund’s top holdings include the Franklin U.S. Core Bond ETF and Franklin U.S. Large Cap Equity IS, which together make up a significant portion of the portfolio. The fund’s sector allocation is heavily weighted towards technology (26.66%), financials (15.51%), and healthcare (12.95%), providing exposure to some of the most dynamic sectors in the market. This diverse mix of holdings is designed to mitigate risk while capturing growth opportunities across different market segments.
Risk Metrics: Understanding the Volatility
SBBAX exhibits a relatively low beta of 0.59, indicating that it is less volatile than the broader market. However, the fund’s Sharpe Ratio of -1.92 and Treynor Ratio of -25.70 suggest that it has not been effectively compensating investors for the risk taken. The fund’s standard deviation of 2.29% reflects its moderate volatility, while the downside risk (UI) of 1.25 indicates a relatively low potential for loss. Despite these metrics, the fund’s negative alpha and upside potential highlight challenges in achieving superior risk-adjusted returns.
Comparative Analysis: How SBBAX Stacks Up
When compared to similar funds like Touchstone Balanced-A (SEBLX) and BNY Mellon Balanced Opportunity-A (DBOAX), SBBAX’s performance is competitive, particularly in the short term. However, its expense ratio of 1.12% is higher than some of its peers, which could impact net returns over time. While SBBAX offers a higher yield of 1.92%, its negative alpha and higher expense ratio may deter cost-conscious investors. This comparative analysis suggests that while SBBAX has strengths, particularly in yield, investors should weigh these against its cost and performance metrics.
Sector and Asset Allocation: Strategic Diversification
SBBAX’s strategic allocation across sectors and asset classes is a key feature of its investment strategy. With 45.63% of its assets in U.S. equities and 37.09% in bonds, the fund maintains a balanced exposure that aims to capitalize on equity growth while providing income through bonds. The fund’s sector allocation is notably concentrated in technology, financials, and healthcare, sectors known for their growth potential. This strategic diversification is intended to enhance returns while managing risk, making SBBAX a potentially attractive option for investors seeking a balanced approach.
Expense Ratio: A Consideration for Investors
The expense ratio of SBBAX is 1.12%, which is relatively high compared to some of its peers. This higher cost can erode returns over time, particularly in a low-return environment. Investors should consider whether the fund’s performance justifies this expense, especially given its negative alpha and mixed long-term returns. While the fund offers a competitive yield and diversified exposure, the expense ratio remains a critical factor for investors to consider when evaluating the overall cost-effectiveness of the investment.
Conclusion: Is SBBAX Right for You?
SBBAX stands out for its balanced approach to growth and income, offering a diversified portfolio with a focus on U.S. stocks and bonds. Its recent strong performance and competitive yield make it an appealing choice for moderate-risk investors seeking both capital appreciation and income. However, potential investors should be mindful of its higher expense ratio and mixed long-term performance. For those who prioritize yield and diversification, SBBAX may be a suitable addition to their portfolio, but cost-conscious investors may want to explore other options with lower fees.
Similar Securities
BDHAX: BlackRock Dynamic High Income-InvA | Balanced Growth and Income Fund
BDHAX offers a high yield of 6.72% with a balanced approach, investing in both equities and fixed income, ideal for income-focused investors.
PACAX: Putnam Dynamic AssetAlloc Conservative-A | Balanced Conservative Fund
PACAX offers a conservative asset allocation with a focus on capital preservation, featuring a 1.03% expense ratio and a 2.36% yield.
FMTIX: Franklin Moderate Allocation-A | Balanced Growth with Moderate Risk
FMTIX offers balanced growth with a moderate risk profile, featuring a diversified portfolio and competitive yield of 1.76%.
AADAX: Invesco Select Risk Growth Investor-A | High-Risk Equity Growth Fund
AADAX offers aggressive growth with 95% equity allocation, outperforming peers with a 21.75% 1-year return despite a high expense ratio.
BAAPX: BlackRock 80/20 Target Allocation-A | Aggressive Growth Fund
BAAPX offers aggressive growth with a 0.65% expense ratio, focusing on equity securities for high-risk investors.
Futher Reading
https://www.morningstar.com/funds/xnas/SBBAX/quote
https://finance.yahoo.com/quote/SBBAX/”>Yahoo: Franklin Multi-Asset Conserv Growth-I
https://ftcloud.fasttrack.net/web/chart/SBBAX
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