Is TPINX a Strong Bond Fund Right Now?
International Bond - Developed fund seekers should not consider taking a look at Templeton Global Bond A (TPINX) at this time. TPINX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), 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 made its debut in September of 1986, and since then, TPINX has accumulated about $1.49 billion in assets, per the most up-to-date date available. The fund is currently managed by Michael Hasenstab who has been in charge of the fund 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 -1.27%, and it sits in the middle 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 1.73%, 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. TPINX's standard deviation over the past three years is 11.36% compared to the category average of 10.24%. The fund's standard deviation over the past 5 years is 10.16% compared to the category average of 11.52%. 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.
For those that believe interest rates will rise, this is an important factor to consider. TPINX has a modified duration of 6.03, which suggests that the fund will decline 6.03% for every hundred-basis-point increase in interest rates.
TPINX carries a beta of 1.1, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.44, 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 28.11 in high quality bonds rated at least "AA" or higher, while 38.17% are of medium quality, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 20.66%, giving TPINX an average quality of BBB. This means that it focuses on medium quality securities.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, TPINX is a load fund and it has an expense ratio of 1.01%.
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
With a 'strong sell' rank, Templeton Global Bond A is in the bottom 20% of all mutual funds we cover. This means that our models suggest it is one of the worst options for investors in International Bond - Developed right now, though this could change if the performance of the fund and the Zacks Ranks of the equities in TPINX turnaround in the next data release.
For additional information on the International Bond - Developed area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into TPINX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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This article originally published on Zacks Investment Research (zacks.com).
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