Is TPINX a Strong Bond Fund Right Now?

Looking for a International Bond - Developed fund? You may want to consider Templeton Global Bond A (TPINX) as a possible option. TPINX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes TPINX as International Bond - Developed, a segment that is packed with options. Focusing on fixed income securities outside from developed nations besides the U.S.,International Bond - Developed funds invest in assets from countries like Japan, Germany, the UK, France, and Australia. These holdings dominate the top holdings, and funds in this category offer geographic diversification; however, they can also introduce currency risk.

History of Fund/Manager

Franklin is based in San Mateo, CA, and is the manager of TPINX. Templeton Global Bond A debuted in September of 1986. Since then, TPINX has accumulated assets of about $1.42 billion, according to the most recently available information. Michael Hasenstab is the fund's current manager and has held that role since December of 2001.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of -0.34%, and is in the middle 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 2.83%, which places it in the bottom 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. Over the past three years, TPINX's standard deviation comes in at 10.91%, compared to the category average of 10.01%. The standard deviation of the fund over the past 5 years is 10.47% compared to the category average of 11.64%. This makes the fund less volatile than its peers over the past half-decade.

Bond Duration

Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

If you believe interest rates will rise, this is an important factor to look at. TPINX has a modified duration of 4.82, which suggests that the fund will decline 4.82% for every hundred-basis-point increase in interest rates.

Income

Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 5.82% means that a $10,000 investment should result in a yearly payout of $582.

If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond. Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks.

This fund has a beta of 0.89, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, TPINX has a positive alpha of 1.07, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade "AAA" to "D" given to a bond that indicates its credit quality. With this letter scale in mind, TPINX has 23.72 in high quality bonds rated at least "AA" or higher, while 42.34% are of medium quality, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 33.53%, giving TPINX an average quality of BBB. This means that it focuses on medium quality securities.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, TPINX is a load fund. It has an expense ratio of 0.97% compared to the category average of 0.91%. So, TPINX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $1,000; 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, Templeton Global Bond A ( TPINX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, Templeton Global Bond A ( TPINX ) looks like a somewhat average choice for investors right now.

Want even more information about TPINX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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This article originally published on Zacks Investment Research (zacks.com).

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