Is FEMDX a Strong Bond Fund Right Now?
Any investors hoping to find an International Bond - Emerging fund could think about starting with Franklin Emerging Market Debt Opportunity Adviser (FEMDX). FEMDX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify FEMDX in the International Bond - Emerging category, an area rife with many investment choices. International Bond - Emerging funds focus on fixed income securities from emerging nations from around the globe. This usually results in exposure to economies like China, Brazil, India, South Africa, and Indonesia, just to name a few. Funds here offer geographic diversification, but they can also introduce currency risk into the picture as well.
History of Fund/Manager
Franklin is based in San Mateo, CA, and is the manager of FEMDX. Since Franklin Emerging Market Debt Opportunity Adviser made its debut in October of 2006, FEMDX has garnered more than $35.93 million in assets. Nicholas Hardingham is the fund's current manager and has held that role since June of 2014.
Performance
Of course, investors look for strong performance in funds. FEMDX has a 5-year annualized total return of 3.98% 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 3.48%, 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. The standard deviation of FEMDX over the past three years is 9.92% compared to the category average of 10.06%. Over the past 5 years, the standard deviation of the fund is 11.68% compared to the category average of 11.86%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.1, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, FEMDX has a positive alpha of 4.12, which measures performance on a risk-adjusted basis.
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, FEMDX is a no load fund. It has an expense ratio of 1% compared to the category average of 0.90%. So, FEMDX is actually more expensive than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1 million; 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, Franklin Emerging Market Debt Opportunity Adviser ( FEMDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, this fund looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the International Bond - Emerging, make sure to go to www.zacks.com/funds/mutual-funds 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.
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