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3 Top-Performing Franklin Templeton Mutual Funds in Q1

After finishing last year on a positive note, Franklin Templeton mutual funds continued to register healthy returns in the first quarter of 2016. Meanwhile, an increase in assets under management (AUM) in the year-to-date frame compared with last year indicates that mutual funds of the company have attracted significant investor attention during the first quarter. A remarkable rebound in financial markets after being beaten down heavily earlier this year played a major role in boosting the performance of Franklin Templeton mutual funds.

In this scenario, it will be interesting to find out the top performing Franklin Templeton mutual funds of the first quarter. Moreover, a detailed look at the overall performance of Franklin Templeton funds during the quarter will be the perfect setting to discuss its top performers.

Q1 Performance

According to Morningstar, mutual funds of Franklin Templeton returned around 10.3% in the first quarter after gaining 13.3% last year. The company’s AUM that gets invested in mutual funds increased nearly $36.5 billion to $477.8 billion this year compared to that in 2015. Allocating significant portions of its assets in equity as well as fixed income mutual funds was one of the main reasons for this impressive performance.

Out of the 283 Franklin Templeton funds we studied, 198 funds ended the quarter in the positive territory, while only one fund – Templeton Foreign C (TEFTX) – ended in breakeven. Franklin Gold and Precious Metals Adv ( FGADX), which carries a Zacks Mutual Fund Rank #2 (Buy), emerged as the top performer among Franklin Templeton funds with 45.5% returns.

However, only seven funds succeeded in coming up with double-digit returns. These funds were either precious metals or utility funds. The safe haven appeal of the gold and utility boosted the performance of funds related to these sectors. Separately, Franklin Biotechnology Discovery A ( FBDIX), which has a Zacks Mutual Fund Rank #5 (Strong Sell), emerged as the biggest loser among Franklin Templeton funds. FBDIX lost 24.5% in the first quarter.

Remarkable Rebound

As mentioned earlier, a strong rebound in the major benchmarks in the latter half of the first quarter was mainly behind the strong performance by Franklin Templeton funds. Markets were beaten down heavily in the first half of the first quarter following China-led global growth worries and a huge slump in oil prices. However, a strong recovery in oil prices since the second half of February perked up the markets to finish the quarter mostly in the green.

In the final month, each of the key indexes finished the month with healthy gains and the S&P 500 experienced its highest percentage monthly gain since October. Strong gains in the energy sector led by an oil price surge, eased rate hike fears and encouraging economic data on the domestic front backed the rebound in March.

3 Top-Performing Franklin Templeton Funds

In this segment, we have highlighted three top performing Franklin Templeton mutual funds of the first quarter that also carry a Zacks Mutual Fund Rank #2. These funds also have minimum initial investment within $5000, expense ratios below 1% and net assets over $50 million.

Banking on these fundamentals, we expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

Franklin Gold and Precious Metals Advisor invests the lion’s share of its assets in securities of companies involved in operations related to gold and precious metals. FGADX invests in securities of companies located worldwide irrespective of their market capitalization.

The product returned 45.5% during the first quarter. Annual expense ratio of 0.84% is lower than the category average of 1.44%.

Franklin Small Cap Value Advisor (FVADX) seeks total return over the long run. FVADX invests in common stocks of undervalued companies having market capitalization below $3.5 billion. The fund may invest not more than 25% of its assets in securities of non-U.S. companies.

The fund returned 5.3% during the first quarter. Annual expense ratio of 0.86% is lower than the category average of 1.31%.

Franklin Real Estate Securities Advisor (FRLAX) invests the lion’s share of its assets in real estate companies including REITs. FRLAX primarily focuses on acquiring common stocks of companies. Franklin Real Estate Securities Advisor is a non-diversified fund.

The product returned 5% during the first quarter. Annual expense ratio of 0.74% is lower than the category average of 1.28%.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the help of Zacks Rank.


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