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If you have been looking for International Bond - Emerging funds, it would not be wise to start your search with Franklin Emerging Market Debt Opportunity Adviser (FEMDX). FEMDX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine 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 Templeton is based in San Mateo, CA, and is the manager of FEMDX. Franklin Emerging Market Debt Opportunity Adviser made its debut in October of 2006, and since then, FEMDX has accumulated about $391.94 million in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 4.32%, 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 7.21%, 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. Compared to the category average of 7.23%, the standard deviation of FEMDX over the past three years is 5.1%. The standard deviation of the fund over the past 5 years is 6.2% compared to the category average of 7.58%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. FEMDX has a modified duration of 3.81, which suggests that the fund will decline 3.81% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 7.78% means that a $10,000 investment should result in a yearly payout of $778.