TFSCX
Templeton Instl Foreign Smaller Co-Adv
Exploring TFSCX’s Investment Strategy
The Templeton Instl Foreign Smaller Co-Adv (TFSCX) fund is designed to capture long-term capital growth by investing predominantly in smaller companies located outside the United States, including emerging markets. This strategy allows investors to tap into the growth potential of international small-cap stocks, which are often underrepresented in global portfolios. By focusing on smaller companies, TFSCX aims to exploit inefficiencies in the market, potentially leading to higher returns. The fund’s emphasis on foreign markets provides diversification benefits, reducing reliance on U.S. economic conditions and offering exposure to different economic cycles and growth opportunities.
At A Glance
Executive Summary
TFSCX offers exposure to foreign small caps with a 2.22% yield and 1.09% expense ratio, ideal for growth-focused investors seeking diversification.
Exposure to foreign small caps for diversification. Potential for long-term capital growth. Competitive yield of 2.22%.
Higher expense ratio compared to some peers. Negative recent performance metrics. Higher volatility with a beta of 1.11.
Performance Analysis: A Mixed Bag
TFSCX has shown a mixed performance over various time frames. Over the past year, the fund has delivered a return of 9.53%, which is commendable given the volatility in global markets. However, its three-year annualized return stands at -5.14%, indicating challenges in maintaining consistent performance. The fund’s inception return of 8.09% suggests that it has historically been able to capitalize on its investment strategy, though recent years have been less favorable. The fund’s performance is benchmarked against the MSCI ACWI xUS DivAdj Index, which had a 1-year return of 17.25%, highlighting the fund’s underperformance relative to its benchmark.
Sector Allocation: A Focus on Industrials and Cyclicals
TFSCX’s portfolio is heavily weighted towards the industrials and cyclical sectors, which together account for over 50% of its holdings. This allocation reflects the fund’s strategy to invest in sectors that are poised for growth as global economies recover and expand. The technology sector also represents a significant portion of the portfolio at 11.94%, indicating a balanced approach to capturing growth from both traditional and modern industries. The fund’s minimal exposure to utilities and real estate suggests a focus on sectors with higher growth potential, albeit with increased volatility.
Risk Metrics: Navigating Volatility
Investors in TFSCX should be aware of the fund’s risk profile, which includes a beta of 1.11, indicating higher volatility compared to the market. The fund’s alpha of -7.74% and Sharpe ratio of -0.60 reflect challenges in generating risk-adjusted returns. The standard deviation of 3.75% and a max drawdown of -9.4% further highlight the potential for significant fluctuations in value. Despite these risks, the fund’s correlation with its benchmark is high at 96.58%, suggesting that while it is volatile, it tends to move in line with broader market trends.
Comparative Analysis: How TFSCX Stacks Up
When compared to similar funds, TFSCX presents a unique profile. Its expense ratio of 1.09% is higher than some peers like Columbia International Dividend Inc-Inst (CSVFX) with 0.98%, but it offers a competitive yield of 2.22%. In terms of performance, TFSCX’s 1-year return of 9.53% lags behind BNY Mellon Worldwide Growth-A (PGROX) at 17.73%. However, its focus on smaller companies in foreign markets provides a distinct investment opportunity that may appeal to investors seeking diversification beyond traditional large-cap international funds.
Top Holdings: A Diverse Mix of Global Companies
The top holdings of TFSCX include a diverse array of companies from various industries and regions. Notable positions include Tsumura & Co, ASICS Corp, and Technogym SpA, each representing a small but significant portion of the portfolio. The fund’s largest holding is cash at 4.59%, providing liquidity and flexibility to capitalize on market opportunities. This diverse mix of holdings underscores the fund’s strategy of investing in smaller, potentially high-growth companies across different sectors and geographies, aligning with its objective of long-term capital growth.
Market Cap Allocation: Emphasizing Small and Medium Enterprises
TFSCX’s market cap allocation is predominantly focused on small and medium-sized enterprises, which together make up over 87% of the portfolio. This emphasis on smaller companies aligns with the fund’s strategy to capture growth from less mature, potentially more dynamic businesses. The fund’s minimal exposure to large and extra-large companies suggests a deliberate choice to avoid the more stable but slower-growing segments of the market. This allocation strategy is designed to maximize growth potential, albeit with the acceptance of higher volatility and risk.
Conclusion: Is TFSCX Right for You?
TFSCX stands out as a compelling option for investors seeking exposure to foreign small-cap stocks, offering diversification and the potential for significant growth. Its focus on smaller companies in international markets provides a unique investment opportunity, though it comes with higher volatility and a relatively high expense ratio. The fund’s recent performance challenges may concern some investors, but its long-term growth potential and competitive yield make it an attractive choice for those willing to accept the associated risks. Investors should consider their risk tolerance and investment goals when evaluating TFSCX as part of their portfolio.
Similar Securities
TFSCX: Templeton Instl Foreign Smaller Co-Adv | Foreign Small Cap Growth Fund
TFSCX offers exposure to foreign small caps with a 2.22% yield and 1.09% expense ratio, ideal for growth-focused investors seeking diversification.
PNVAX: Putnam International Capital Opportunity Fund | Foreign Growth Investment
PNVAX offers exposure to high-growth foreign small and mid-cap stocks with a focus on non-US markets, boasting a 1-year return of 18.19%.
PRIDX: TRPrice International Discovery-Inv | High-Growth Foreign Investment
PRIDX offers exposure to high-growth foreign small and mid-cap stocks with a 1.24% expense ratio, outperforming its benchmark with a 1-year return of 18.36%.
OSMAX: Invesco International Small/Mid Com-A | International Small-Cap Growth Fund
OSMAX offers unique exposure to small-cap international stocks with a focus on growth, despite a higher expense ratio and recent underperformance.
IEGCX: Invesco EQV Intl Small Company-C | Innovative International Small-Cap Growth
IEGCX offers exposure to innovative international small-cap stocks with a high expense ratio of 2.31%. It suits investors seeking growth in foreign markets.
Futher Reading
https://www.morningstar.com/funds/xnas/TFSCX/quote
https://finance.yahoo.com/quote/TFSCX/”>Yahoo: Templeton Instl Foreign Smaller Co-Adv
https://ftcloud.fasttrack.net/web/chart/TFSCX
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