Is Franklin Real Estate Security A (FREEX) a strong mutual fund right now?

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Any investors hoping to find a Sector – Real Estate Fund may consider ditching Franklin Real Estate Security A (FREEX). FREEX has a Zacks Mutual Fund rating of 4 (Sell), which is based on nine predictive factors such as size, value and past performance.

purpose

FREEX is one of the many real estate funds to choose from. Sector – Real estate mutual funds are known to invest in Real Estate Investment Trusts (REITs). The REIT is a popular means of generating income due to its tax rules, therefore, in order to avoid double taxation, you must pay at least 90% of your income annually. This method makes the securities in these funds high dividend players, and in some cases even bonds, although their risk is similar to that of stocks.

Fund / manager history

Franklin Templeton is in charge of FREEX, a company based in San Mateo, California. Since the debut of Franklin Real Estate Security A in January 1994, FREEX has raised over $ 329.68 million in assets. The current fund manager Daniel Sher has been managing the fund since May 2014.

Representation

Of course, investors expect strong results from funds. FREEX has a 5-year annual total return of 7.57% and is ranked third among peers in its category. But if you’re looking for a shorter time frame, it’s also worth looking at its 3-year annualized total return of 12.44%, which places it in the top third over that time frame.

It is also important to consider the standard deviation of the return when evaluating the performance of a fund. The lower the standard deviation, the lower the volatility of the fund. The FREEX standard deviation over the past three years is 17.2%, compared to the category average of 15.87%. Over the past 5 years, the fund’s standard deviation is 15.31% compared to the category average of 13.28%. This makes the fund more volatile than its counterparts over the past half decade.

Risk factors

The fund has a 5-year beta of 0.72, so investors should be aware that it is hypothetically less volatile than the market as a whole. Alpha is an additional metric to consider as it represents the risk-adjusted performance of the portfolio compared to the benchmark, which in this case is the S&P 500. Over the past 5 years, the fund has had a negative alpha of -4.05. This means that it is difficult for managers in this portfolio to select securities that generate higher than benchmark returns.

Expenses

Costs are becoming more and more important for investing in mutual funds, especially as competition in this market increases. And all things being equal, a cheaper product will be better than its identical counterpart, so a closer look at these metrics is key for investors. In terms of commissions, FREEX is a loading fund. The expense ratio is 0.99% compared to the category average of 1.22%. In terms of costs, FREEX is actually cheaper than its counterparts.

Although the minimum initial investment in a product is $ 1,000, investors should also take into account that there is no minimum for each subsequent investment.

Bottom line

Overall, Franklin Real Estate Security A (FREEX) has a low Zacks Mutual Fund rating, and coupled with its relatively high performance, moderate risk of deterioration and lower commissions, Franklin Real Estate Security A (FREEX) looks like a somewhat weak choice for investors straight now.

For more information on the Real Estate sector in the mutual fund world, be sure to visit www.zacks.com/funds/mutual-funds. There you can learn more about the ranking process and also dive deeper into FREEX for more information. Want to know even more? We have a full suite of stock tools that you can use to find the best choice for your portfolio, no matter what kind of investor you are.

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