FAX1Z - Franklin Floating Rate Daily Access A

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Franklin Floating Rate Daily Access A (FAX1Z)
Expense Ratio: 0.91%
Expected Lifetime Fees: $27,352.50

The Franklin Floating Rate Daily Access A fund (FAX1Z) is a Bank Loan fund started on 05/1/2001 and has $2.20 billion in assets under management. The current manager has been running Franklin Floating Rate Daily Access A since 05/23/2001. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.25%

MarketRiders Prefers The Following ETF

iShares iBoxx $ Invest Grade Corp Bond (LQD)
Expense Ratio: 0.15%
Expected Lifetime Fees: $4,881.99

The iShares iBoxx $ Invest Grade Corp Bond (LQD) is an Exchange Traded Fund. It is a "basket" of securities that index the Bank Loan investment strategy and is an alternative to a Bank Loan mutual fund. Fees are very low compared to a comparable mutual fund like Franklin Floating Rate Daily Access A because computers automatically manage the stocks.

The Following Bank Loan Funds Have Lower Fees Than Franklin Floating Rate Daily Access A (FAX1Z). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
BlackRock Floating Rate Income Fund Institutional shares BFRIX 46.0% 921 0.71%
Columbia Floating Rate R5 RFRFX 69.0% 493 0.78%
Columbia Floating Rate Z CFRZX 69.0% 493 0.82%
Credit Suisse Floating Rate Hi Inc Instl CSHIX 144.0% 329 0.70%
DWS Floating Rate Inst DFRTX 60.0% 2,000 0.84%
Eaton Vance Floating Rate I EIBLX 56.0% 7,500 0.76%
Eaton Vance Floating-Rate & Hi Inc Inst EIFHX 20.0% 1,000 0.84%
Fidelity Advisor Floating Rate Hi Inc I FFRIX 54.0% 10,100 0.75%
Fidelity Floating Rate High Income FFRHX 54.0% 10,100 0.71%
Franklin Floating Rate Daily Access Adv FDAAX 127.0% 2,200 0.66%
Hartford Floating Rate I HFLIX 96.0% 5,500 0.72%
Hartford Floating Rate R5 HFLTX 96.0% 5,500 0.70%
Hartford Floating Rate Y HFLYX 96.0% 5,500 0.65%
ING Floating Rate Fund Class I IFRIX 79.0% 252 0.77%
Invesco Floating Rate I AFRIX 152.0% 851 0.68%
Invesco Floating Rate Y AFRYX 152.0% 851 0.74%
JHancock2 Floating Rate Income I JFIIX 80.0% 2,400 0.83%
Lord Abbett Floating Rate A LFRSZ 93.6% 2,900 0.82%
Lord Abbett Floating Rate I LFRIX 93.6% 2,900 0.62%
MainStay Floating Rate I MXFIX 38.0% 1,100 0.73%
Neuberger Berman Floating Rate Inc Inst NFIIX 147.0% 204 0.71%
Oppenheimer Senior Floating Rate Y OOSYX 52.0% 5,800 0.72%
PIMCO Senior Floating Rate Fund Institutional Class PSRIX 160.0% 813 0.80%
Pioneer Floating Rate Y FLYRX 57.0% 288 0.70%
Putnam Floating Rate Income Y PFRYX 100.0% 452 0.79%
RidgeWorth Seix Floating RT High Inc A SFRAX 72.0% 3,600 0.85%
RidgeWorth Seix Floating RT High Inc I SAMBX 72.0% 3,600 0.52%
RS Floating Rate A RSFLX 87.0% 1,400 0.85%
RS Floating Rate Y RSFYX 87.0% 1,400 0.60%
T. Rowe Price Instl Floating Rate RPIFX 67.6% 1,900 0.55%
T. Rowe Price Instl Floating Rate Fund Class F PFFRX 67.6% 1,900 0.70%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.