Fund Evaluator:

Templeton Emerging Markets Small Cap R Overview

Templeton Emerging Markets Small Cap R (FTESX) is an actively managed International Equity Diversified Emerging Mkts fund. Franklin Templeton Investments launched the fund in 2006.

The investment seeks long-term capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets in securities of small cap companies located in "emerging market countries." Emerging market countries include those currently considered to be emerging or developing by the United Nations or the countries' authorities or by S&P Dow Jones, Morgan Stanley Capital International or Russell index providers. These countries typically are located in the Asia-Pacific region, Eastern Europe, the Middle East, Central and South America, and Africa.

About Templeton Emerging Markets Small Cap R (FTESX)

There are 2 members of the management team with an average tenure of 7.17 years: Chetan Sehgal (2017), Vikas Chiranewal (2021). Management tenure is more important for actively managed funds than passive index funds.

The fund has 2 primary benchmarks: MSCI ACWI Ex USA NR USD index with a weighting of 100% and MSCI EM Small NR USD index with a weighting of 100%. Templeton Emerging Markets Small Cap R has 97 securities in its portfolio. The top 10 holdings constitute 25.2% of the fund’s assets. The fund meets the SEC requirement of being classified as a diversified fund. The fund is not considered to have an ESG focus with its investment selection and management.

Templeton Emerging Markets Small Cap R is part of the Equity global asset class and is within the International Equity fund group. Templeton Emerging Markets Small Cap R has 93.5% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 2.5%. There is 93.5% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). Templeton Emerging Markets Small Cap R has 4.0% of the portfolio in cash.

Assets Under Management

The fund has $2 million in total assets, which is below the $967 million average for the Diversified Emerging Mkts category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

FTESX Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Templeton Emerging Markets Small Cap R expense ratio is high compared to funds in the Diversified Emerging Mkts category. Templeton Emerging Markets Small Cap R has an expense ratio of 2.01%, which is 74% higher than its category average, making the fund expense ratio grade a F. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. Templeton Emerging Markets Small Cap R has a portfolio turnover rate of 16%, indicating that holds its assets around 0.1 years. By way of comparison, the average portfolio turnover is 68% for the Diversified Emerging Mkts category.

Recently, in the month of July 2026, Templeton Emerging Markets Small Cap R returned -5.3%, which earned it a grade of C, as the Diversified Emerging Mkts category had an average return of -4.9%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all funds in that category.

Templeton Emerging Markets Small Cap R has a trailing yield of 0.96%, which is below the 1.72% category average. The fund normally distributes its income annually and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

Templeton Emerging Markets Small Cap R Grades

Year to date, the fund has returned 7.2%, 11.9 percentage points worse than the category, which translates into a grade of F. The fund has returned 9.6% over the past year (grade of F), 9.2% over the past three years (grade of F) and 3.3% per year over the past five years (grade of F) and 5.9% per year over the past 10 years (grade of F).

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