Back to top

Image: Bigstock

Is Franklin Biotechnology Discovery A (FBDIX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

If you have been looking for Sector - Health funds, a place to start could be Franklin Biotechnology Discovery A (FBDIX - Free Report) . FBDIX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

The world of Sector - Health funds is an area filled with options, such as FBDIX. Healthcare is one of the biggest sectors of the American economy, and Sector - Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

Franklin is based in San Mateo, CA, and is the manager of FBDIX. The Franklin Biotechnology Discovery A made its debut in September of 1997 and FBDIX has managed to accumulate roughly $669.85 million in assets, as of the most recently available information. Evan McCulloch is the fund's current manager and has held that role since September of 1997.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 2.34%, and it sits in the bottom 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 13.06%, 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. Compared to the category average of 14.34%, the standard deviation of FBDIX over the past three years is 18.42%. Over the past 5 years, the standard deviation of the fund is 18.74% compared to the category average of 14.16%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.62, so it is likely going to be less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. FBDIX has generated a negative alpha over the past five years of -6.25, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, FBDIX is a load fund. It has an expense ratio of 1.01% compared to the category average of 0.99%. Looking at the fund from a cost perspective, FBDIX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and higher fees, Franklin Biotechnology Discovery A ( FBDIX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.

Your research on the Sector - Health segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Franklin Biotechnology Discovery A (FBDIX) - free report >>

Published in