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Allocation Balanced fund seekers should not consider taking a look at Franklin Income C (FCISX) at this time. FCISX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
FCISX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.
History of Fund/Manager
FCISX finds itself in the Franklin Templeton family, based out of San Mateo, CA. Franklin Income C made its debut in May of 1995, and since then, FCISX has accumulated about $14.22 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.32%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.33%, which places it in the middle 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 FCISX over the past three years is 7.23% compared to the category average of 8.93%. Over the past 5 years, the standard deviation of the fund is 8.36% compared to the category average of 9.13%. This makes the fund less 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. FCISX lost 39.64% in the most recent bear market and underperformed comparable funds by 3%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.61, 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. The fund has produced a negative alpha over the past 5 years of -3.94, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.