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

Zacks Equity Research

If you have been looking for Sector - Precious Metal funds, a place to start could be Franklin Gold & Precious Metals A (FKRCX). FKRCX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Sector - Precious Metal funds is an area filled with options, such as FKRCX. Usually, Sector - Precious Metal mutual funds invest in stocks with a focus on the mining and production of precious metals like gold, silver, platinum, and palladium. Here, stocks often trade as leveraged bets of the underlying commodity, meaning they're tied to the metal's prices and can 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 $658.25 million 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

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 8.39%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.4%, 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. FKRCX's standard deviation over the past three years is 24.17% compared to the category average of 13.46%. Looking at the past 5 years, the fund's standard deviation is 33.01% compared to the category average of 15.96%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, FKRCX lost 37.73% and outperformed its peer group by 0%. These results could imply that the fund is an on par choice than its peers during a sliding market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.1, which means it is hypothetically less volatile than the market at large. 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. Over the past 5 years, the fund has a positive alpha of 11.62. This means 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 0.98% compared to the category average of 1.44%. From a cost perspective, FKRCX is actually cheaper 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.

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.

Want even more information about FKRCX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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