For those exploring Sector – Real Estate funds, Franklin Real Estate Securities A (FREEX) might not be the best option to consider. FREEX holds a Zacks Mutual Fund Rank of 4 (Sell), reflecting factors such as costs, historical performance, and market positioning.
Fund Focus
Categorized under Sector – Real Estate, FREEX primarily invests in real estate investment trusts (REITs). REITs are known for their income-generating potential due to tax advantages, requiring them to distribute at least 90% of income annually. This characteristic often results in high dividend yields, making them somewhat akin to bonds in terms of income generation while maintaining equity-like risk.
Fund History and Management
Managed by Franklin, a firm headquartered in San Mateo, CA, FREEX was launched in January 1994. As of the latest data, the fund has amassed approximately $202.35 million in assets. Daniel Scher has overseen the fund since May 2014, bringing his expertise to its management.
Performance Review
Performance is a critical factor for investors. FREEX has a 5-year annualized return of 2.82%, placing it in the lower third of its category. Its 3-year annualized return of -5.39% similarly positions it among the laggards in its peer group. It’s important to note that these figures exclude certain fees, which, if included, would further diminish the returns.
Volatility also plays a role in evaluating a fund’s performance. FREEX’s standard deviation over the last three years is 21.2%, higher than the category average of 16.08%. Similarly, its 5-year standard deviation of 20.89% surpasses the category average of 16.73%, signaling greater volatility than its peers.
Risk Metrics
Assessing risk through beta and alpha provides additional insight. FREEX has a 5-year beta of 0.99, indicating market-level volatility. However, its 5-year alpha stands at -9.7, reflecting underperformance relative to its benchmark, the S&P 500, on a risk-adjusted basis.
Cost Analysis
Expenses are another area where FREEX underperforms compared to its peers. Its expense ratio of 1.16% exceeds the category average of 0.98%, making it a pricier choice. As a load fund, it also includes sales charges that further increase the cost of investment. The minimum initial investment is $1,000, with no minimum for subsequent contributions.
Final Verdict
In summary, Franklin Real Estate Securities A (FREEX) has underwhelming performance, above-average volatility, and relatively high costs, earning it a low Zacks Mutual Fund Rank. While it may appeal to some investors seeking real estate exposure, others might find more competitive options elsewhere.
For those wanting a broader analysis of mutual funds or their overall portfolio, tools and resources at Zacks.com can provide additional guidance and insights.
Related topics:
