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FRIAX - Franklin Income Adv

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Franklin Income Adv (FRIAX)
Expense Ratio: 0.48%
Expected Lifetime Fees: $15,089.86


The Franklin Income Adv fund (FRIAX) is a Conservative Allocation fund started on 12/31/1996 and has $61.80 billion in assets under management. The current manager has been running Franklin Income Adv since 03/22/1957. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

iShares S&P Conservative Allocation (AOK)
Expense Ratio: 0.11%
Expected Lifetime Fees: $3,595.26


The iShares S&P Conservative Allocation (AOK) is an Exchange Traded Fund. It is a "basket" of securities that index the Conservative Allocation investment strategy and is an alternative to a Conservative Allocation mutual fund. Fees are very low compared to a comparable mutual fund like Franklin Income Adv because computers automatically manage the stocks.




The Following Conservative Allocation Funds Have Lower Fees Than Franklin Income Adv (FRIAX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
Vanguard LifeStrategy Cnsrv Gr Inv VSCGX 46.0% 6,800 0.15%
Vanguard LifeStrategy Income Inv VASIX 43.0% 2,600 0.13%
Vanguard Tax-Managed Balanced Adm VTMFX 12.0% 892 0.12%
Vanguard Wellesley Income Adm VWIAX 48.0% 29,300 0.18%
Vanguard Wellesley Income Inv VWINX 48.0% 29,300 0.25%



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Why Are These Metrics Important?


Turnover
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.

Assets
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.