TEMFX
Templeton Foreign-A
Global Reach with a Value Focus
Templeton Foreign-A (TEMFX) is a mutual fund designed to provide investors with long-term capital growth by investing primarily in equity securities of companies located outside the United States, including emerging markets. This fund is categorized under Foreign-Large Value, emphasizing investments in undervalued companies with strong potential for appreciation. Managed by Franklin Templeton Investments, TEMFX offers a strategic blend of growth and value, making it an attractive option for investors seeking to diversify their portfolios with international exposure. The fund’s objective is to capitalize on global market opportunities while maintaining a disciplined approach to value investing.
At A Glance
Executive Summary
TEMFX offers diversified foreign equity exposure with a focus on value. It stands out with a 2.44% yield and a strategic allocation in financials and cyclicals.
Exposure to diverse international markets Focus on value stocks with growth potential Strong financial and cyclical sector allocation
Higher expense ratio compared to peers Negative alpha indicating underperformance High beta suggesting increased volatility
Performance Analysis: Navigating Volatility
TEMFX has demonstrated a mixed performance over various time frames. Over the past year, the fund achieved a return of 9.20%, which is notable but falls short of its benchmark, the MSCI ACWI xUS DivAdj Index, which returned 17.25%. The fund’s five-year annualized return stands at 4.38%, while its inception return is 7.08%. Despite these figures, the fund’s negative alpha of -8.07% indicates underperformance relative to its benchmark, suggesting that the fund has struggled to generate excess returns. The fund’s beta of 1.24 implies higher volatility compared to the market, which may concern risk-averse investors.
Strategic Portfolio Composition
The portfolio of TEMFX is strategically diversified across various sectors and regions, with a significant allocation to financials (22.97%) and cyclicals (21.87%). This allocation reflects the fund’s focus on sectors that are poised for growth in a recovering global economy. The top holdings include major international companies such as Carrefour, BP PLC, and Samsung Electronics, which together represent a substantial portion of the fund’s assets. The fund’s exposure to technology (11.88%) and industrials (11.22%) further enhances its potential for capital appreciation, while its minimal allocation to real estate and healthcare suggests a targeted investment strategy.
Comparative Analysis: Standing Among Peers
When compared to similar funds, TEMFX presents a unique profile. While its expense ratio of 1.10% is higher than some peers like Nuveen International Eq A (TIERX) with an expense ratio of 0.81%, TEMFX offers a higher yield of 2.44%, which may appeal to income-focused investors. However, its performance lags behind peers such as Nuveen International Opps A (TIOSX) and AmerBeacon EAM International Value-Inv (TIVFX), both of which have achieved higher one-year returns. This comparative analysis highlights the importance of weighing expense ratios against potential returns and income when selecting a fund.
Risk Metrics: Understanding the Volatility
TEMFX exhibits several risk metrics that investors should consider. The fund’s standard deviation of 4.54% indicates moderate volatility, while its Sharpe ratio of -0.51 suggests that the fund has not been able to generate adequate returns for the level of risk taken. The Treynor ratio of -6.52 further underscores this point, indicating that the fund’s returns have not compensated for its market risk. Additionally, the fund’s downside risk (UI) of 3.72 and max drawdown of -10.3% highlight potential vulnerabilities during market downturns. These metrics suggest that while TEMFX offers growth potential, it also carries significant risk.
Sector and Market Cap Allocation Insights
TEMFX’s sector allocation is heavily weighted towards financials and cyclicals, which together comprise nearly 45% of the portfolio. This focus aligns with the fund’s value-oriented strategy, targeting sectors that are expected to benefit from economic recovery and growth. The fund’s market cap allocation is predominantly in large (39.75%) and extra-large (33.22%) companies, providing stability and potential for steady returns. The presence of medium-cap stocks (25.47%) adds a layer of growth potential, while the minimal allocation to small-cap stocks (1.94%) suggests a conservative approach to risk management.
Yield and Income Potential
With a yield of 2.44%, TEMFX offers a competitive income stream for investors seeking regular payouts. This yield is particularly attractive in the context of the fund’s focus on foreign equities, which often provide opportunities for dividend growth. The fund’s yield compares favorably to some of its peers, making it a viable option for income-focused investors. However, it’s important to consider the fund’s overall performance and risk profile when evaluating its income potential. The combination of yield and growth potential positions TEMFX as a balanced choice for investors looking to diversify their income sources.
Conclusion: Is TEMFX Right for You?
TEMFX stands out as a mutual fund that offers diversified exposure to international markets with a focus on value investing. Its strategic allocation in financials and cyclicals, along with a competitive yield, makes it an appealing option for investors seeking growth and income. However, the fund’s higher expense ratio and underperformance relative to its benchmark may deter some investors. Those who are comfortable with the associated risks and volatility may find TEMFX to be a suitable addition to their portfolio, particularly if they are looking to enhance their international exposure and capitalize on value opportunities in foreign markets.
Similar Securities
TRIGX: T. Rowe Price International Value Equity | Foreign-Large Value Fund
TRIGX offers a blend of growth and value in large-cap foreign stocks with a competitive 0.85% expense ratio and 2.47% yield.
HFQAX: Janus Henderson Global Equity Income-A | High Income & Growth
HFQAX offers a high 7.83% yield with a focus on income-producing equities, suitable for value investors seeking global exposure.
TFEQX: Templeton Instl Int'l Eqty-Primary | Global Value Investment
TFEQX offers a 5.86% yield with a focus on non-US equities, outperforming its benchmark with a 19.50% 1-year return and a competitive 0.88% expense ratio.
PNGAX: Putnam International Value-A | Foreign Value Investment
Putnam International Value-A (PNGAX) offers a 2.19% yield with a focus on foreign large value stocks, providing growth and income potential.
TEMFX: Templeton Foreign-A | Global Value Investment
TEMFX offers diversified foreign equity exposure with a focus on value. It stands out with a 2.44% yield and a strategic allocation in financials and cyclicals.
Futher Reading
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.