Fund Evaluator:

Franklin U.S. Small Cap Equity A Overview

Franklin U.S. Small Cap Equity A (LMBAX) is an actively managed U.S. Equity Small Blend fund. Franklin Templeton Investments launched the fund in 2009.

The investment seeks long-term capital appreciation. The fund normally invests at least 80% of net assets, plus any borrowings for investment purposes, in equity securities of companies with small market capitalizations domiciled, or having their principal activities, in the United States, at the time of investment or other investments with similar economic characteristics. It may also invest in securities of foreign companies in the form of American Depositary Receipts ("ADRs").

About Franklin U.S. Small Cap Equity A (LMBAX)

There are 3 members of the management team with an average tenure of 2.00 years: Christopher Floyd (2021), Brett Risser (2025), Adrian Chan (2026). Management tenure is more important for actively managed funds than passive index funds.

The fund has 2 primary benchmarks: Russell 3000 TR USD index with a weighting of 100% and Russell 2000 TR USD index with a weighting of 100%. Franklin U.S. Small Cap Equity A has 272 securities in its portfolio. The top 10 holdings constitute 13.6% 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.

Franklin U.S. Small Cap Equity A is part of the Equity global asset class and is within the U.S. Equity fund group. Franklin U.S. Small Cap Equity A has 3.2% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 94.8%. There is 3.2% 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). Franklin U.S. Small Cap Equity A has 2.0% of the portfolio in cash.

Assets Under Management

The fund has $111 million in total assets, which is below the $694 million average for the Small Blend 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.

LMBAX 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 Franklin U.S. Small Cap Equity A expense ratio is high compared to funds in the Small Blend category. Franklin U.S. Small Cap Equity A has an expense ratio of 1.30%, which is 24% higher than its category average, making the fund expense ratio grade a D. 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. Franklin U.S. Small Cap Equity A has a portfolio turnover rate of 48%, indicating that holds its assets around 0.0 years. By way of comparison, the average portfolio turnover is 65% for the Small Blend category.

Recently, in the month of June 2026, Franklin U.S. Small Cap Equity A returned 5.6%, which earned it a grade of C, as the Small Blend category had an average return of 5.9%. 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.

Franklin U.S. Small Cap Equity A has a trailing yield of 0.01%, which is below the 0.41% category average. The fund normally distributes its income semi-annually and its capital gains semi-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.

Franklin U.S. Small Cap Equity A Grades

Year to date, the fund has returned 21.0%, 0.7 percentage points worse than the category, which translates into a grade of C. The fund has returned 42.3% over the past year (grade of A), 21.5% over the past three years (grade of A) and 10.2% per year over the past five years (grade of A) and 11.7% per year over the past 10 years (grade of B).

For more mutual fund grades, analysis and screening tools to help your investment discovery, join AAII for a $2, full-access trial. Learn more here: https://invest.aaii.com/membership.

Otherwise, for more information about Franklin U.S. Small Cap Equity A, including its riskiness, submit your email to unlock the rest of the article.