FRSGX
Franklin Small/MidCap Growth-A
Introduction to Franklin Small/MidCap Growth-A
The Franklin Small/MidCap Growth-A fund, with ticker symbol FRSGX, is a mutual fund designed to achieve long-term capital growth by investing primarily in small to mid-capitalization companies. Managed by Franklin Templeton Investments, this fund allocates at least 80% of its net assets to equity securities within this market cap range. As a MidCap Growth fund, it aims to capitalize on the growth potential of smaller companies that are often overlooked by larger funds. With an expense ratio of 0.86%, it offers investors a competitive option within its category, focusing on growth-oriented strategies.
At A Glance
Executive Summary
FRSGX offers growth potential with a focus on small/mid-cap equities, boasting a 34% 1-year return. Competitive expense ratio of 0.86%.
Focus on small/mid-cap growth equities. Strong 1-year return of 34%. Managed by Franklin Templeton Investments.
Higher expense ratio compared to peers. Negative 3-year return of -3.08%. High downside risk with a max drawdown of -10.6%.
Performance Analysis: A Year of Impressive Returns
FRSGX has demonstrated a remarkable performance over the past year, achieving a 34% return, which is a testament to its effective growth strategy. This performance, however, should be viewed in the context of its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return over the same period. While the fund slightly underperformed its benchmark, it still outpaced many of its peers in the MidCap Growth category. The fund’s annualized returns since inception stand at 10.96%, indicating a strong long-term growth trajectory. Despite a negative three-year return of -3.08%, the fund’s recent performance suggests a potential rebound and continued growth.
Portfolio Composition: A Focus on Technology and Industrials
The portfolio of FRSGX is heavily weighted towards the technology sector, which comprises 28.47% of its holdings, followed by industrials at 17.67%. This allocation reflects the fund’s strategy to invest in sectors with high growth potential. Notable holdings include Ares Management Corp, Axon Enterprise Inc, and Gartner Inc, each contributing significantly to the fund’s performance. The fund’s focus on technology and industrials aligns with its growth objective, as these sectors are often at the forefront of innovation and economic expansion. This strategic allocation positions the fund to benefit from technological advancements and industrial growth.
Risk Metrics: Understanding the Volatility
Investors should be aware of the risk metrics associated with FRSGX. The fund has a beta of 1.00, indicating that its volatility is on par with the market. However, its alpha of -3.66% suggests that it has underperformed relative to its benchmark on a risk-adjusted basis. The Sharpe Ratio of -0.25 further highlights the fund’s challenges in delivering returns relative to its risk. Additionally, the fund experienced a maximum drawdown of -10.6%, with a recovery period of just one month, indicating resilience in bouncing back from market downturns. These metrics underscore the importance of considering both the potential rewards and risks when investing in this fund.
Comparative Analysis: How FRSGX Stacks Up Against Peers
When compared to similar funds such as MFS MidCap Growth-A (OTCAX) and CIBC Atlas MidCap Equity-Inst (AWMIX), FRSGX holds its ground with a competitive 1-year return of 34%. However, its expense ratio of 0.86% is higher than some peers, which may be a consideration for cost-conscious investors. Despite this, the fund’s focus on small to mid-cap growth equities provides a unique value proposition. While peers like Sit MidCap Growth (NBNGX) have slightly higher returns, FRSGX’s strategic sector allocation and management by Franklin Templeton Investments offer a compelling case for investors seeking growth in this category.
Sector Allocation: Leveraging Growth in Key Industries
FRSGX’s sector allocation is a critical component of its growth strategy. With a significant 28.47% allocation to technology, the fund is well-positioned to capitalize on the rapid advancements and innovations within this sector. The industrials sector, comprising 17.67% of the portfolio, further supports the fund’s growth objectives by tapping into the expanding industrial market. Additionally, the fund’s exposure to healthcare and financials, at 13.51% and 12.47% respectively, provides diversification and potential for stable growth. This strategic sector allocation is designed to leverage growth opportunities while managing risk across various industries.
Market Cap Allocation: Targeting Small and Medium Enterprises
The market cap allocation of FRSGX is predominantly focused on medium-sized companies, which make up 73.69% of the portfolio. This focus on mid-cap companies is complemented by a 13.60% allocation to small-cap stocks, providing a balanced approach to capturing growth opportunities. The fund’s minimal exposure to large-cap stocks, at 6.77%, underscores its commitment to investing in smaller companies with high growth potential. This allocation strategy is aligned with the fund’s objective of achieving long-term capital growth by investing in companies that are often in the early stages of their growth cycle, offering significant upside potential.
Conclusion: Is FRSGX the Right Fit for Your Portfolio?
FRSGX stands out as a compelling option for investors seeking exposure to small and mid-cap growth equities. With a strong 1-year return of 34% and a strategic focus on high-growth sectors like technology and industrials, the fund offers significant growth potential. However, investors should consider the higher expense ratio and the fund’s recent volatility, as indicated by its risk metrics. FRSGX is best suited for growth-oriented investors who are comfortable with the inherent risks of investing in smaller companies and are looking for a fund managed by a reputable firm like Franklin Templeton Investments. As always, potential investors should assess their risk tolerance and investment goals before making a decision.
Similar Securities
RPMGX: TRPrice MidCap Growth-Inv | Mid-Cap Growth Opportunities
RPMGX offers mid-cap growth with a focus on technology and healthcare, boasting a 28.57% 1-year return, though with higher risk metrics.
BSDAX: BlackRock Small/MidCap Growth Fund | High-Growth U.S. Equities
BSDAX offers exposure to high-growth U.S. small/mid-cap stocks with a focus on above-average earnings potential, despite higher volatility.
LBGAX: ClearBridge MidCap Growth-A | MidCap Growth Investment
LBGAX offers a robust 39.67% 1-year return with a focus on mid-cap equities, outperforming its benchmark with a 2.00% alpha.
PRDMX: TRPrice Diversified MidCap Growth-Inv | High-Return MidCap Growth Fund
PRDMX offers a 44.07% 1-year return with a focus on mid-cap growth, outperforming its benchmark with a 0.86% expense ratio.
FRSGX: Franklin Small/MidCap Growth-A | MidCap Growth Investment
FRSGX offers growth potential with a focus on small/mid-cap equities, boasting a 34% 1-year return. Competitive expense ratio of 0.86%.
Futher Reading
https://finance.yahoo.com/quote/FRSGX/”>Yahoo: Franklin Small/MidCap Growth-A
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