FREEX
Franklin Real Estate Securities-A
Introduction to Franklin Real Estate Securities-A
Franklin Real Estate Securities-A (FREEX) is a mutual fund designed to maximize total return by investing primarily in equity securities of companies within the real estate industry. Managed by Franklin Templeton Investments, this fund employs a bottoms-up
At A Glance
Executive Summary
FREEX offers a value-oriented approach in real estate with a 1.92% yield and medium-cap focus, suitable for long-term investors.
Focus on medium-cap real estate companies Value-oriented, long-term investment strategy 1.92% yield for income generation
Higher expense ratio at 1.16% Negative alpha and Sharpe ratio Limited sector diversification
value-oriented, long-term approach to stock selection, focusing on medium-capitalization companies. With a yield of 1.92% and an expense ratio of 1.16%, FREEX aims to provide investors with a balanced mix of income and growth potential. The fund’s strategy is particularly appealing to those looking for exposure to the real estate sector, offering a specialized investment vehicle that aligns with long-term financial goals.
Performance Analysis: Navigating Market Volatility
FREEX has demonstrated a mixed performance over various time frames, with a notable 27.24% return over the past year, outperforming its benchmark, the MSCI World DivAdj Index, which returned 31.60%. However, the fund’s three-year annualized return stands at -1.59%, indicating challenges in maintaining consistent performance. The fund’s ten-year return of 5.36% and inception return of 8.01% suggest a potential for long-term growth, albeit with periods of volatility. Investors should consider the fund’s negative alpha of -4.39% and Sharpe ratio of -0.27, which highlight the fund’s struggle to generate returns above its risk-adjusted expectations. These metrics underscore the importance of a long-term investment horizon for those considering FREEX.
Portfolio Composition: A Focus on Medium-Cap Real Estate
FREEX’s portfolio is heavily concentrated in the real estate sector, with 100% allocation to real estate equities. The fund’s top holdings include American Tower Corp (9.29%), Welltower Inc (7.17%), and Prologis Inc (6.79%), reflecting a strategic focus on medium-cap companies. This focus is further emphasized by the fund’s market cap allocation, with 55.99% in medium-cap stocks. The fund’s approach aims to capitalize on the growth potential of medium-sized real estate firms, which may offer a balance between stability and growth. This strategy is particularly suited for investors seeking targeted exposure to the real estate market, with an emphasis on medium-cap opportunities.
Risk Metrics: Understanding the Fund’s Volatility
FREEX exhibits a beta of 1.07, indicating a slightly higher volatility compared to the broader market. The fund’s standard deviation of 4.72% and downside risk of 4.81% suggest moderate risk levels, which investors should consider when evaluating their risk tolerance. The fund’s correlation with its benchmark is 70.77%, highlighting a moderate level of alignment with broader market movements. However, the negative Treynor ratio of -4.11 and upside potential of -0.91 indicate challenges in achieving positive risk-adjusted returns. These risk metrics suggest that while FREEX offers potential for growth, it also requires careful consideration of market conditions and investor risk appetite.
Comparative Analysis: FREEX vs. Similar Funds
When compared to similar funds, FREEX presents a unique value proposition with its focus on real estate equities. While funds like Hennessy Technology-Inv (HTECX) and Fidelity Select Tech Hardware (FDCPX) offer exposure to technology sectors, FREEX provides a specialized focus on real estate, which may appeal to investors seeking diversification away from technology-heavy portfolios. However, FREEX’s expense ratio of 1.16% is higher than some peers, such as Fidelity Adv Consumer Discretionary-A (FCNAX) with an expense ratio of 0.0098%. Despite this, FREEX’s yield of 1.92% offers an attractive income component, distinguishing it from funds with lower or no yield. Investors should weigh these factors when considering FREEX as part of their investment strategy.
Sector Allocation: A Singular Focus on Real Estate
FREEX’s sector allocation is exclusively dedicated to real estate, with no exposure to other sectors such as technology, healthcare, or financials. This singular focus allows the fund to concentrate its resources and expertise on identifying value opportunities within the real estate market. The fund’s top holdings, including Equinix Inc and Realty Income Corp, reflect a diverse range of real estate sub-sectors, from data centers to retail properties. This concentrated approach may appeal to investors who are confident in the real estate sector’s growth prospects and are seeking a fund that aligns with their sector-specific investment thesis. However, the lack of diversification across sectors may also increase the fund’s sensitivity to real estate market fluctuations.
Investment Strategy: A Value-Oriented Approach
FREEX employs a value-oriented investment strategy, focusing on identifying undervalued real estate companies with strong growth potential. This bottoms-up” approach involves detailed analysis of individual companies
assessing factors such as financial health
Similar Securities
JERSX: Janus Henderson Global Real Estate-S | Global Real Estate Investment
JERSX offers global real estate exposure with a 2.45% yield, focusing on capital appreciation and income. High expense ratio but strong 1-year return.
IARCX: Invesco Real Estate-C | High Total Return Real Estate Fund
IARCX focuses on real estate securities, offering high total return with a 1.43% yield. It stands out with a 24.75% 1-year return despite a high expense ratio.
PAGEX: TRPrice Global Real Estate-Adv | Global Real Estate Investment
PAGEX offers global real estate exposure with a 2.24% yield and a focus on capital appreciation, despite a higher expense ratio of 1.15%.
ASRCX: Invesco Global Real Estate Income-C | High Income Real Estate Fund
ASRCX offers high income with a 2.81% yield, focusing on real estate securities. It has a high expense ratio of 1.96% but provides global exposure.
BAREX: BlackRock Real Estate Securities-InvA | Real Estate Growth & Income Fund
BAREX focuses on U.S. real estate equities, offering a 2.57% yield with a 1% expense ratio, ideal for growth and income in the real estate sector.
Futher Reading
https://finance.yahoo.com/quote/FREEX/”>Yahoo: Franklin Real Estate Securities-A
https://ftcloud.fasttrack.net/web/chart/FREEX
Disclaimer: The information provided on this website is for informational purposes only and should not be construed as financial, investment, or other professional advice. PeepFinance does not endorse or recommend any specific securities, investments, or strategies. The opinions expressed are solely those of the authors and are not intended to be used as the basis for any investment decisions. All investments carry risks, and readers are encouraged to conduct their own research or consult with a financial professional before making any financial decisions. PeepFinance and its authors are not responsible for any losses or damages arising from the use of this information.