TFEQX
Templeton Instl Int’l Eqty-Primary
Global Reach with a Value Focus
Templeton Instl Int’l Eqty-Primary (TFEQX) is a mutual fund designed to provide investors with long-term capital growth by investing in equity securities and debt obligations of companies and governments outside the United States. As a Foreign-Large Value fund, TFEQX focuses on identifying undervalued stocks in international markets, offering a unique opportunity for investors seeking to diversify their portfolios beyond domestic equities. Managed by Franklin Templeton Investments, the fund leverages its global expertise to navigate diverse markets, aiming to capitalize on value opportunities across various sectors and regions.
At A Glance
Executive Summary
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.
High yield of 5.86% for income-focused investors.\nStrong 1-year return of 19.50%, outperforming benchmark.\nDiverse international exposure with a focus on large-cap equities.
Higher expense ratio compared to some peers.\nLimited exposure to small-cap stocks.\nPotential currency risk due to international investments.
Impressive Recent Performance
TFEQX has demonstrated strong performance over the past year, achieving a 19.50% return, which surpasses its benchmark, the MSCI ACWI xUS DivAdj Idx, which posted a 17.25% return. This outperformance highlights the fund’s effective strategy in selecting undervalued international equities. The fund’s ability to deliver superior returns is further underscored by its positive alpha of 2.24%, indicating that it has added value beyond what would be expected based on its beta of 1.07. This performance is particularly noteworthy given the fund’s focus on large-cap value stocks, which have historically been more stable but less aggressive in growth compared to other categories.
Strategic Sector Allocation
The fund’s sector allocation is strategically diversified, with significant investments in financials (20.72%), industrials (18.94%), and healthcare (12.44%). This allocation reflects a balanced approach to capturing growth across various economic sectors while maintaining a value-oriented investment philosophy. The fund’s exposure to technology (11.34%) and energy (11.21%) sectors also positions it to benefit from technological advancements and energy market dynamics. By maintaining a diversified sector allocation, TFEQX aims to mitigate risks associated with sector-specific downturns while capitalizing on growth opportunities in key industries.
Top Holdings Reflect Global Diversification
TFEQX’s top holdings include prominent international companies such as Deutsche Telekom AG, Sanofi SA, and Taiwan Semiconductor Manufacturing Co Ltd, each contributing to the fund’s global diversification strategy. These holdings represent a mix of industries, including telecommunications, pharmaceuticals, and technology, which are essential for capturing growth in various regions. The inclusion of companies like Shell PLC and BP PLC further diversifies the fund’s exposure to the energy sector, providing a hedge against market volatility. This diverse portfolio composition underscores the fund’s commitment to identifying value opportunities across different markets and industries.
Risk Metrics and Volatility Management
The fund’s risk metrics indicate a well-managed approach to volatility, with a beta of 1.07 suggesting a slightly higher sensitivity to market movements compared to the benchmark. However, the fund’s standard deviation of 3.68% and a Sharpe ratio of 0.18 reflect a balanced risk-reward profile. The fund’s downside risk, measured by a downside risk (UI) of 2.06, is managed effectively, as evidenced by a relatively modest max drawdown of -6.9%. These metrics suggest that TFEQX is suitable for investors who are comfortable with moderate risk levels in exchange for potential higher returns.
Competitive Expense Ratio and Yield
TFEQX offers a competitive expense ratio of 0.88%, which is relatively low for a fund with international exposure and active management. This cost efficiency is complemented by a substantial yield of 5.86%, making it an attractive option for income-focused investors. The fund’s ability to provide a high yield while maintaining a competitive expense ratio is a key differentiator, especially when compared to similar funds in the category. This combination of cost-effectiveness and income potential enhances the fund’s appeal to investors seeking both growth and income from their international investments.
Comparison with Similar Funds
When compared to similar funds such as Nationwide Global Sustainable Equity-R6 (GGEIX) and William Blair Global Leaders-I (WGFIX), TFEQX stands out with its focus on value investing and a higher yield. While these peers have slightly higher 1-year returns, TFEQX’s emphasis on value stocks and its substantial yield offer a different risk-reward profile. Additionally, TFEQX’s expense ratio is competitive, though slightly higher than some peers, which may be justified by its active management strategy and focus on undervalued international equities. This comparison highlights TFEQX’s unique positioning within the foreign-large value category.
Conclusion: A Strong Choice for Value Investors
In conclusion, Templeton Instl Int’l Eqty-Primary (TFEQX) is a compelling option for investors seeking international exposure with a value focus. Its strong recent performance, strategic sector allocation, and competitive yield make it an attractive choice for those looking to diversify their portfolios beyond domestic markets. While the fund’s expense ratio is slightly higher than some peers, its active management and focus on undervalued stocks justify the cost. TFEQX is particularly suitable for investors who are comfortable with moderate risk levels and are seeking both growth and income from their investments. Its global diversification and value-oriented strategy make it a standout option in the foreign-large value category.
Similar Securities
SBIEX: ClearBridge International Value-A | Diversified Non-US Equity Fund
SBIEX offers diversified non-US equity exposure with a 3.90% yield, suitable for value-focused investors seeking international diversification.
DODFX: Dodge & Cox International Stock-I | Diversified Foreign Equity Investment
DODFX offers diversified foreign equity exposure with a competitive 0.62% expense ratio, focusing on value stocks across multiple countries.
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.
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.
HDAVX: Janus Henderson Responsible Int'l Div-A | High Yield Global Value Fund
HDAVX offers a 2.07% yield with a focus on global value stocks, outperforming its benchmark with a 19.49% 1-year return.
Futher Reading
https://finance.yahoo.com/quote/TFEQX/”>Yahoo: Templeton Instl Int’l Eqty-Primary
https://ftcloud.fasttrack.net/web/chart/TFEQX
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