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Is FKTFX a Strong Bond Fund Right Now?

If you've been stuck searching for Mutual Fund Bond funds, consider Franklin California Tax-Free Income A (FKTFX) as a possibility. FKTFX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

FKTFX finds itself in the Franklin family, based out of San Mateo, CA. Since Franklin California Tax-Free Income A made its debut in February of 1977, FKTFX has garnered more than $7.69 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 1.92%, and it sits in the top 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 -1.6%, which places it in the middle third during this time-frame.

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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, FKTFX's standard deviation comes in at 8.38%, compared to the category average of 13.2%. Looking at the past 5 years, the fund's standard deviation is 7.62% compared to the category average of 13.62%. This makes the fund less volatile than its peers over the past half-decade.

FKTFX carries a beta of 1.07, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.1, 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, FKTFX has 53.5% in high quality bonds rated at least 'AA' or higher, while 25.6% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.

However, it is worth noting that 21 % of the bonds in this fund are not ranked, so take the average quality level with a bit of caution.

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, FKTFX is a load fund. It has an expense ratio of 0.60% compared to the category average of 0.90%. From a cost perspective, FKTFX is actually cheaper than its peers.

While the minimum initial investment for the product is $1,000, investors should also note that there is no minimum for each subsequent investment.

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

Bottom Line

Overall, Franklin California Tax-Free Income A ( FKTFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Franklin California Tax-Free Income A ( FKTFX ) looks like a good potential choice for investors right now.

This could just be the start of your research on FKTFXin the Mutual Fund Bond category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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