Franklin Mutual Global Discovery Fund

Scorecard
4 / 5 Stars
Lipper
2 2 5 3 3
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
TheStreet.com
C+ (Hold)

U.S. News evaluated 304 World Stock Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 19.74 percent over the past year, 10.87 percent over the past three years, 11.99 percent over the past five years, and 9.22 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 5.8%
1 Year 19.7%
3 Years (Annualized) 10.9%
5 Years (Annualized) 12.0%
10 Years (Annualized) 9.2%

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Summary

The Mutual Global Discovery Fund is a world-stock fund that has stuck to parent company Franklin Templeton's deep-value investing style to achieve steady long-term returns with low volatility. While the fund's strategy hasn't fluctuated over the years, its management changed in December 2009, and its name changed in April 2009 to include "global" to better reflect the fund's international focus.

As of July 03, 2014, the fund has assets totaling $25.53 billion. Its portfolio consists primarily of stocks in U.S. and foreign companies, mainly in Europe, as well as a large cash stake.

The fund's management invests heavily in consumer goods, financial services and energy companies in both the United States and abroad. Generally, the managers will hold about 100 stocks. Top holdings include a mix of consumer goods names like British American Tobacco and Carlsberg along with a few financial names like Bank of America. The fund has returned 19.74 percent over the past year and 10.87 percent over the past three years. Since its 1992 inception, the fund has posted solid long-term returns.

Former managers Anne Gudefin and Charles Lahr left the fund in December 2009, and have been replaced by Peter Langerman and Philippe Brugere-Trelat, both of the Mutual Series group. New management has steadily lowered the fund's cash stake that once reached as high as 50 percent of total assets to 13 percent as of the end of May. The fund has returned 11.99 percent over the past five years and 9.22 percent over the past decade.

Investment Strategy

The management follows a value-oriented investment strategy of buying undervalued securities, risk arbitrage securities, and distressed companies. It invests in mainly mid- and large- cap companies with market capitalizations greater than $1.5 billion, with fewer assets in smaller companies. The fund may invest up to 100 percent of its assets in foreign securities, and it does not invest more than 25 percent of its assets in securities of companies in emerging-market countries, according to the fund's prospectus. Historically, the management has hedged most of its foreign-currency exposure to the U.S. dollar.

Role in Portfolio

Morningstar calls the fund a core player in a portfolio, saying, "Investors can use this fund as a go-anywhere core holding. However, its deep-value style and willingness to hold cash mean that it has the potential to lag when the markets are roaring."

Management

Peter Langerman and Philippe Brugere-Trelat have managed the fund since Dec. 4, 2009, replacing Anne Gudefin and Charles Lahr. Gudefin and Lahr left the fund to become executive vice presidents and global equity portfolio managers at PIMCO.

Fees

Franklin Mutual Global Discovery Fund has an expense ratio of 1.98 percent.

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Risk

Value securities may not increase in price and may decline further in price. Also, the fund's foreign investments are subject to risks due to fluctuations in currency, as well as economic and political conditions. Its investments in smaller companies can be more volatile than those in larger companies. Its investments in mergers, reorganizations, or liquidations involve certain risks. The fund's willingness to hold cash may weigh it down during stock market rallies, according to Morningstar. Over time, the fund has had a relatively low risk profile, and Morningstar says it "continues to be cautious."

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 3 for one year, 3 for five years, and 2 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

"Mutual Series has seen a lot of turnover since 2000, and while the firm has taken steps to address this issue, it remains somewhat  of a fertile ground for hedge-fund poaching and, therefore, personnel turnover. Another concern is the large asset base Mutual Series as a group is managing. Mutual Series' diversified, global approach to investing mitigates this concern."

Litman Gregory 2010-06-30

In the annual Lipper/Barron's Fund Families Survey for 2009, Franklin Templeton Investments ranks 17th out of 61 fund families.

Lipper

Morningstar gives this fund a stewardship rating of C on a scale of A to F, saying, "This fund is supported by an average corporate culture, and its grade is lowered due to a serious run-in with regulators in 2004. We like the fund's independent board of directors, but we think the trustees could be doing more for fund owners."

Morningstar

In the annual Lipper/Barron's Fund Families Survey for 2009, Franklin Templeton Investments ranks 17th out of 61 fund families.

Lipper

Morningstar gives this fund a stewardship rating of C on a scale of A to F, saying, "This fund is supported by an average corporate culture, and its grade is lowered due to a serious run-in with regulators in 2004. We like the fund's independent board of directors, but we think the trustees could be doing more for fund owners."

Morningstar

See Also:

Top Franklin Templeton Investments Funds