Back to top

Image: Bigstock

Is Franklin Natural Resources A (FRNRX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Sector - Energy fund seekers should consider taking a look at Franklin Natural Resources A (FRNRX - Free Report) . FRNRX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

FRNRX is one of many Sector - Energy funds to choose from. Sector - Energy mutual funds are comprised of various changing and hugely important industries throughout the massive global energy sector. Even though clean energy is beginning to pick up steam, oil and gas companies have the highest exposure, but carbon-based fuels will be the biggest group of assets in these funds.

History of Fund/Manager

Franklin is based in San Mateo, CA, and is the manager of FRNRX. Since Franklin Natural Resources A made its debut in June of 1995, FRNRX has garnered more than $264.18 million in assets. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.43%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 14.55%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. FRNRX's standard deviation over the past three years is 23.69% compared to the category average of 16.33%. Looking at the past 5 years, the fund's standard deviation is 32.81% compared to the category average of 17.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.27, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. FRNRX's 5-year performance has produced a negative alpha of -5.52, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FRNRX is a load fund. It has an expense ratio of 1.01% compared to the category average of 0.99%. From a cost perspective, FRNRX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively similar performance, worse downside risk, and higher fees, Franklin Natural Resources A ( FRNRX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.

This could just be the start of your research on FRNRXin the Sector - Energy category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Franklin Natural Resources A (FRNRX) - free report >>

Published in