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Is Franklin Gold & Precious Metals A (FKRCX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
·4 min read

If you've been stuck searching for Sector - Precious Metal funds, consider Franklin Gold & Precious Metals A (FKRCX) as a possibility. FKRCX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FKRCX is a Sector - Precious Metal option, and this area is loaded with different options. Sector - Precious Metal funds typically invest in companies that are involved in the mining and production of precious metals like gold, silver, platinum, and palladium. Because stocks in this environment often trade as leveraged bets of the underlying commodity--they are tied to the prices of the metal--these equities tend to be volatile.

History of Fund/Manager

Franklin Templeton is based in San Mateo, CA, and is the manager of FKRCX. Franklin Gold & Precious Metals A made its debut in May of 1969, and since then, FKRCX has accumulated about $1.01 billion in assets, per the most up-to-date date available. The fund's current manager, Steve Land, has been in charge of the fund since April of 1999.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 22.6%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 21.24%, which places it in the top third during this time-frame.

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. The standard deviation of FKRCX over the past three years is 36.59% compared to the category average of 19.89%. The standard deviation of the fund over the past 5 years is 37.91% compared to the category average of 18.72%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FKRCX has a 5-year beta of 0.91, which means it is likely to be less volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. FKRCX has generated a positive alpha over the past five years of 13.74, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FKRCX is a load fund. It has an expense ratio of 0.93% compared to the category average of 1.44%. So, FKRCX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment has no minimum amount.

Bottom Line

Overall, Franklin Gold & Precious Metals A ( FKRCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Franklin Gold & Precious Metals A ( FKRCX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Sector - Precious Metal funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FKRCX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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