SBSPX
Franklin S&P 500 Index Fund-A
Introduction to Franklin S&P 500 Index Fund-A
The Franklin S&P 500 Index Fund-A (SBSPX) is designed to closely track the performance of the S&P 500 Index, providing investors with exposure to a broad range of large-cap U.S. equities. Managed by Franklin Templeton Investments, this fund aims to replicate the index’s security weightings as closely as possible, making it an attractive option for those seeking growth through a diversified portfolio of established companies. With an expense ratio of 0.54%, SBSPX offers a cost-effective way to invest in the U.S. stock market’s leading companies, while its yield of 0.77% provides a modest income stream.
At A Glance
Executive Summary
SBSPX offers S&P 500 exposure with a 0.54% expense ratio, closely tracking the index for large-cap growth.
Closely tracks S&P 500 Index Strong technology sector allocation Competitive annualized returns
Higher expense ratio than peers Negative alpha and Sharpe ratio Limited bond diversification
Performance Metrics and Historical Returns
SBSPX has demonstrated strong performance over various time frames, with a notable one-year return of 36.90%, closely mirroring the S&P 500 Total Return Index’s 37.62%. Over the past five years, the fund has achieved an annualized return of 15.40%, reflecting its ability to capture the growth of the large-cap sector. Despite its impressive returns, the fund’s alpha is -0.77%, indicating it has slightly underperformed its benchmark on a risk-adjusted basis. The Sharpe ratio of -0.06 suggests that the fund’s returns have not been commensurate with the risk taken, a factor investors should consider when evaluating its performance.
Sector Allocation and Top Holdings
The fund’s portfolio is heavily weighted towards the technology sector, which comprises 32.97% of its holdings. This significant allocation reflects the dominance of tech giants in the S&P 500 and positions the fund to benefit from the sector’s growth potential. Top holdings include Apple Inc. (7.18%), Microsoft Corp. (6.48%), and NVIDIA Corp. (6.05%), which are among the most influential companies driving market trends. Other notable holdings are Amazon.com Inc. and Meta Platforms Inc., further emphasizing the fund’s focus on high-growth technology and communication stocks. This sector concentration can offer substantial upside but also introduces sector-specific risks.
Risk Metrics and Volatility Analysis
SBSPX exhibits a beta of 1.00, indicating that its volatility is in line with the broader market. The fund’s standard deviation of 3.56% suggests moderate volatility, typical for a large-cap index fund. However, the negative Treynor ratio of -0.77 and downside risk of 1.88 highlight potential concerns regarding risk-adjusted performance. The fund’s max drawdown of -8.5% over a short period underscores the potential for significant losses during market downturns. Investors should weigh these risk metrics against the fund’s growth potential, particularly if they are risk-averse or seeking more stable investment options.
Comparative Analysis with Similar Funds
When compared to similar funds like Invesco S&P 500 Index Fund-A (SPIAX) and BNY Mellon S&P 500 IxFd (PEOPX), SBSPX’s expense ratio of 0.54% is notably higher, as peers offer ratios as low as 0.005%. Despite this, SBSPX’s one-year return of 36.90% is competitive, closely aligning with its peers’ performance. The fund’s yield of 0.77% is slightly lower than some competitors, which may appeal to income-focused investors. While SBSPX provides robust exposure to the S&P 500, investors might consider the cost differences and yield variations when selecting an index fund that aligns with their financial goals.
Market Capitalization and Asset Allocation
SBSPX’s asset allocation is predominantly in U.S. equities, with 98.08% of its portfolio dedicated to this asset class. The fund’s market capitalization distribution is skewed towards extra-large companies, which make up 46.16% of the portfolio, followed by large-cap stocks at 34.44%. This focus on larger market cap stocks aligns with the fund’s objective of mirroring the S&P 500 Index. The minimal allocation to small and medium-cap stocks reflects the fund’s strategy of investing in well-established companies with significant market influence. This allocation strategy supports the fund’s growth objective but may limit exposure to smaller, potentially higher-growth opportunities.
Expense Ratio and Cost Considerations
The expense ratio of 0.54% for SBSPX is a critical consideration for investors, especially when compared to similar index funds with significantly lower fees. While the fund offers a straightforward approach to investing in the S&P 500, the higher expense ratio could impact long-term returns, particularly for cost-sensitive investors. It’s important to weigh the benefits of the fund’s management and tracking accuracy against the cost, as lower-cost alternatives may provide similar exposure with less impact on net returns. Investors should consider whether the fund’s performance and alignment with their investment strategy justify the higher expense.
Conclusion: Suitability for Investors
SBSPX stands out for its close tracking of the S&P 500 Index, making it a suitable choice for investors seeking large-cap growth through a diversified portfolio of leading U.S. companies. Its strong technology sector allocation positions it well for future growth, although the higher expense ratio and risk metrics may deter some investors. This fund is ideal for those who prioritize index replication and are comfortable with the associated costs and risks. Investors seeking lower fees or more diversified exposure might explore other options, but for those aligned with its strategy, SBSPX offers a compelling investment opportunity.
Similar Securities
JAGIX: Janus Henderson Growth & Income-T | Balanced Large-Cap Investment
JAGIX offers a balanced approach with a 0.87% expense ratio, focusing on large-cap growth and income, outperforming peers in stability.
TPLGX: TRPrice Inst LargeCap Core Growth-Inst | High-Return Large Cap Growth Fund
TPLGX excels with a 45.20% 1-year return, driven by top tech stocks and a 0.57% expense ratio, outperforming peers in large-cap growth.
JAMRX: Janus Henderson Research-T | High Growth Potential in Large-Cap Stocks
JAMRX excels with a 44.58% 1-year return, focusing on tech-heavy large-cap growth stocks, outperforming its benchmark.
PNOPX: Putnam Sustainable Leaders-A | Sustainable Growth Investment
PNOPX focuses on sustainable growth with top holdings in tech giants, offering a 37.07% 1-year return and a competitive 0.87% expense ratio.
POMIX: TRPrice Total Equity Market IxFd | Diversified Large-Cap Growth Fund
POMIX offers diversified large-cap exposure with a 0.19% expense ratio, outperforming its benchmark with a 38.09% 1-year return.
Futher Reading
https://finance.yahoo.com/quote/SBSPX/”>Yahoo: Franklin S&P 500 Index Fund-A
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