Franklin MicroCap Value Fund

Fund Description

The fund seeks high total return by investing at least 80% of its net assets in companies with a total market capitalization of less than $500 million at the time of purchase.

Strategy Statement

"We look for financially sound, micro-cap companies where we can gain from market inefficiencies. We seek companies with low price-to-book value that we believe will increase over several years."

Bruce Baughman

Management

Bruce Baughman

Bruce Baughman

  • Joined Franklin Templeton in 1987
  • Managed Fund Since 1995
Oliver Haung Wong, CFA

Oliver Haung Wong, CFA®

  • Joined Franklin Templeton in 2012
  • Managed Fund Since 2019

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Investment Process

Rating

Overall Morningstar Rating As of 10/31/2019

Rating Category: Small Value

Morningstar
The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating As of 10/31/2019

Years Ratings Funds
in category
3
3 Stars
387
5
3 Stars
342
10
3 Stars
238

Morningstar Style Box As of09/30/2019

Strategy, Benefits, Results

Strategy

We are long-term, bottom-up investors looking for companies with solid operating results and trading at attractive valuations. We are bargain seekers looking for $1 worth of value for 80 cents.

We seek undervalued micro-capitalization companies with the following characteristics:

  • Well-managed companies with strong fundamentals and low price-to-book values.
  • Stock prices that are low based on earnings, cash flow or sales and relative to the market, a company's industry or a company's earnings record.
  • Recent sharp price declines but the potential for good long-term earning prospects.
  • Valuable intangibles not reflected in the stock price, such as franchises, underused or understated assets or cash, or patents and trademarks.

We are buy-and-hold investors who generally seek to hold an investment for five or more years.

Benefits

  • MicroCap Exposure. We like micro caps that exist below Wall Street's radar, where we can take advantage of the market's inefficiencies.
  • Broad Market Exposure. We invest in a broad variety of companies across multiple sectors and industries.
  • Value Expertise. Investors benefit from our veteran management team with extensive value-investing experience.

Selling The Fund

  1. Highlight the fund's Lipper rankings and Morningstar ratings.
  2. Point out the manager's value expertise and management team's long tenure.
  3. Emphasize the broad market exposure to companies across all sectors and industries.
  4. Highlight the benefit of investing in micro-cap companies: they are generally off Wall Street's radar leaving room to take advantage of the market's inefficiencies.