American Funds U.S. Small & Mid Cap Equity Fund Class F-3 SMDNX

American Fds U.S. Sm & Md Cp Eq F-3 holds a quantitatively derived Silver Morningstar Medalist Rating. The rating reflects that it has scored well on factors Morningstar research associates with future outperformance relative to category peers.

People: Above Average

The People Pillar assessment is based on quantitative measures of manager experience, track record, and alignment. Over periods of up to 10 years, the successful manager experience metric, calculated across the actively managed strategies the manager has run over that period, ranks above peers. Separately, we measure risk-adjusted excess return by analyzing managers' information ratios over the one-, three-, and five-year periods. These rank slightly below peers, slightly below peers, and below peers, respectively. Managers have no reported investment in the fund.

Process: Above Average

The Process rating is driven by the fund's gross-of-fee information ratio, a measure of risk-adjusted excess return. It ranks above peers over one year. The parent firm's risk-adjusted success ratio, which measures the share of its equity funds that outperform peers, ranks above peer firms over 10 years.

Performance (in US Dollar)

Over the past 12 months, American Fds U.S. Sm & Md Cp Eq F-3 share class returned 14.1%, underperforming both its category index, the Morningstar US Mid Cap Mkt TR USD Index (21.3%), and its Morningstar category peers (17%).

Price

American Fds U.S. Sm & Md Cp Eq F-3's Prospectus Adjusted Expense Ratio is 0.51% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Mid-Cap Blend Category, where the median fee is 0.83% per year. This cost positioning translates into a Medalist Rating Price Score of 1.21, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.

American Fds U.S. Sm & Md Cp Eq F-3 is assigned an Above Average Process rating. Our evaluation of a strategies' Process Pillar focuses on the effectiveness of its investment approach. A well-structured process should be clearly defined and consistently applied. This assessment incorporates quantitative measures of risk-adjusted returns, success ratio, and portfolio stability to gauge the fund's ability to execute its strategy effectively over time.

Fund Information Ratio

We assess the strategy's ability to generate risk-adjusted excess returns relative to its Morningstar Category Index using the gross-of-fee information ratio. This is evaluated over one-, three-, and five-year periods where available. Here, the category-relative information ratio ranks above peers over one year. The fund's three- and five-year information ratio is not available.

Brand/Asset Class Risk-Adjusted Success Ratio

The risk-adjusted success ratio gauges a firm's ability to deliver competitive results within each major asset class. It reflects the share of the firm's funds that both survived and outperformed the peer average over trailing three-, five-, and 10-year periods, where available. Based on the average performance of the group's equity fund offerings, the success ratio ranks slightly below peers, relative to the other firms in the strategy's asset class over three years, slightly below peers over five years, and above peers over 10 years.

Portfolio Characteristics

Assessment of the fund's portfolio characteristics helps determine whether a fund is consistent in its investment approach. The standard deviation of size and style scores over the past three years is used to evaluate how stable the portfolio remains relative to its Morningstar category peers. Where the size and style variability metric breaches the upper tolerance limit, a small deduction is applied to the Process rating, reflecting greater variability. No penalty is applied to the strategy.

American Fds U.S. Sm & Md Cp Eq F-3 earns an Above Average People rating. The People Pillar assessment evaluates the factors that shape the managers' ability to deliver consistent returns. This methodology combines quantitative inputs to judge the investment team’s strength, alignment, and stability.

Manager Experience

We assess each manager's historical ability to outperform their Morningstar Category Indices by calculating the tenure-weighted net number of successful excess return months over the past ten years. This figure reflects the number of months in which each manager achieved positive gross-of-fee excess returns, minus those with negative excess returns, across actively managed funds. To calculate this, we look across all the actively managed strategies the manager has run within the last 10 years. The result is then weighted by the managers' tenure on the strategy. On this strategy, the successful manager experience metric ranks above peers.

Manager Information Ratio

We evaluate manager's skill in generating risk-adjusted excess returns using the gross-of-fee information ratio, defined as the average gross excess return divided by the average tracking error across all strategies under their management. The metric is evaluated across the one-, three-, and five-year periods, where available, with greater emphasis placed on longer-term performance to provide a comprehensive view of consistency over time. Here, the information ratio ranks slightly below peers over one year, slightly below peers over three years, and below peers over five years.

Manager Investment

We consider whether fund managers have personally invested at least USD 500,000 in the fund, as our analysis indicates that higher coinvestment levels are correlated with better long-term performance. A small upward adjustment to the score behind the People rating would be given if this investment hurdle were met; however, no manager investment was found in this case.

Manager Retention

We assess manager stability by examining both average annual retention rates and average manager tenure at the branding company level over the past five years. A small deduction to the People Rating is applied if either metric falls within the bottom decile globally. This adjustment reflects the increased risk of key talent turnover, which can impact the long-term execution of the strategy. No negative adjustment is warranted.

Combining these factors creates a structured and data-driven framework to assess portfolio manager quality, balancing historical performance with forward-looking considerations such as alignment and team stability.

Capital Group stands out from the pack as it enhances capabilities around strong core competencies. It earns a High Parent rating.

Since 1931, Capital Group, parent of American Funds, has thoughtfully built out capabilities to become one of the world’s largest asset managers, managing more than USD 3 trillion dollars. Building on the success of its long-term-oriented, multiple-manager system for global equities, the firm has developed robust fixed-income and multi-asset units, each managing more than USD 500 billion. In January 2026, as part of its periodic review of its now five distinct research organizations, Capital Group implemented changes to its equity investment subsidiaries. This exercise resulted in most equity strategies having at least one portfolio manager change, but according to the firm, it better balances each of Capital Group’s three equity groups in terms of investment breadth and helps the firm better align leadership opportunities across the groups. These kinds of shifts have occurred before, with the last coming in 2018.

Capital Group has also turned its attention to some modern opportunities. To address public/private market convergence trends, it launched in April 2025 two semiliquid funds with private market giant KKR. In keeping with its signature portfolio management approach, it splits those funds into multiple sleeves, which are managed independently by distinct managers at each firm. Capital Group plans to deepen this relationship with target-date and model portfolios, as well as public/private equity funds. On the other end of the spectrum, although the firm is firmly dedicated to active management, it has also acknowledged investor preference for passive investing and has thus partnered with indexing stalwarts Vanguard, BlackRock, and Schwab on active/passive models. Capital Group’s proven investment prowess, strong reputation among investors, and scale mean it can be selective with its partnerships.

In addressing another recent trend, since early 2022, the firm has launched more than 25 active exchange-traded funds globally, most of which are distinct, but several are similar to some of its legacy American Funds mutual funds. Unlike some of its peers, though, it has not filed for SEC exemptive relief to offer ETFs as a share class.

That’s a lot of change for such a storied and sizable firm, but Capital Group has a long history of serving investors well.

Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Capital Group (Branding Name ID: BN000008D6), is covered by Morningstar Manager Research.

Performance is evaluated in US Dollar, measured to the end of August 2026.

Short-Term Performance

Over the past 12 months, American Fds U.S. Sm & Md Cp Eq F-3 share class returned 14.1%, underperforming its category index, the Morningstar US Mid Cap Mkt TR USD Index (21.3%), and its Morningstar category peers (17%).

American Fds U.S. Sm & Md Cp Eq F-3's Prospectus Adjusted Expense Ratio is 0.51% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Mid-Cap Blend Category, where the median fee is 0.83% per year. This cost positioning translates into a Medalist Rating Price Score of 1.21, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.