SURF THE WAVE OF DIGITAL TRANSFORMATION

Are you thinking of investing in the technology sector or is the fear of market volatility holding you back?

Watch Jonathan Curtis, Portfolio Manager of Franklin Technology Fund, as he explains digital disruption and how he capitalises on the trend in an uncertain market environment.

3 REASONS TO INVEST IN TECHNOLOGY



1. STRONG ECONOMY
  • The US economy remains resilient and employment rate remains high.
  • Businesses are investing in automation and artificial intelligence to increase productivity.
  • Companies are transforming their businesses into digital-based models and technology solutions are the enablers to power this transformation process.


    2. BUY ON DIPS
    • Market gyrations are part and parcel of the economic cycle. Such market fluctuations present a window of opportunity to purchase strong technology companies that are priced at a discount to their intrinsic value.
    • Companies in all sectors are investing in technology to stay ahead of the digital disruptors in their markets. The firms selling the technology are the key beneficiaries of these investment inflows.
    • The trade war’s impact on the technology sector is primarily in the semiconductor space. Investment opportunities can be found among semiconductor equipment suppliers as China builds its own semiconductor capabilities in its bid to be independent from the US.



    3. REASONABLE VALUATIONS
    • The technology sector has been a strong performer in the recent years, and it will continue to grow as a result of the digital transformation megatrend.
    • Technology sector valuations (price-to-earnings ratio) are nowhere near the dotcom era peak and remain reasonable relative to growth potential1.
    • The technology sector is the third most profitable sector in the S&P 500 Index2.

    KEY DRIVERS OF TECHNOLOGY GROWTH

    Many industries will be digitally transformed by using data to better understand their customers and improve business processes.

    Investment opportunities are found in the six sub-themes supporting their pathway to digital transformation.

    Artificial Intelligence
    Enables data analysis using automated computing processes at scale

    Examples: Alibaba3

    Cloud Computing
    Supports companies in scaling their digital businesses globally at a low cost

    Example: Amazon3

    Financial Services (FinTech)
    Key to new commerce growth that allows consumers to transact digitally

    Examples: Tencent3

    Internet-of-Things (IoT)
    A rich source of consumer and business process data

    Example: Qualcomm3

    Software as a Service (SaaS)
    Provides enterprises with a more efficient way to attract new customers while scaling operations

    Examples: Salesforce3

    Digital Advertising
    An efficient way to understand and communicate with potential buyers
    Example: Shopify3



    As technology becomes more integrated into business processes and consumer behaviour, the sector has grown enormously.

    Capitalise on the growth themes in digital transformation with Franklin Technology Fund.

    CAPITALISING ON TECHNOLOGY SECTOR’S GROWTH
    WITH THE FRANKLIN TECHNOLOGY FUND

    1. TECHNOLOGY SHOULD BE A CORE INVESTMENT
     
    Technology firms are increasingly central to the economy and businesses. The sector is dominating the equity markets; eight out of the 10 most valuable companies are technology-related. The diversity of technology sub-sectors and the prevalence of technology in daily life make a strong argument for treating technology as a core element of investor portfolios.

    Most Valuable Companies by Market Capitalisation (USD billion)4

    80%
    are technology-related firms
    • Technology firms
    • Other
    2. MANAGED BY A SILICON VALLEY-BASED TEAM OF EXPERTS

    The team is located in the proximity of leading technology companies, research universities and VC firms.

    Tech Experts5

    Providing in-depth research in industries like robotics, technology, enterprise software and media devices.
    3. STRONG PERFORMANCE

    Franklin Technology Fund has outperformed its benchmark, peers and global equities over the 15-Year period, and has navigated through significant market events.

    Growth of US$1,000 Initial Investment (Before 5% Sales charge)6
     15-Year Period Ended 31 Aug 2019

    4. NOTABLE ACHIEVEMENTS7,8

    5 STARS

    Morningstar Rating 97% of the time since July 2016

    AWARD-WINING FUND

    Best Information Tech Equity Fund in the Singapore Lipper Fund Awards 2011, 2012, 2013, 2014, 2017, 2018 and 2019



     

    NEXT STEPS

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    Footnotes

    1. Source: Factset as of 30 Sep 2019. Price-to-Earnings ratio (P/E), NTM MSCI World Information Technology Index:
      • Peak of DotCom, 31 Mar 2000 = 57.6x
      • Current, 30 Sep 2019 = 19.7x
    2. Source: Bloomberg as of 30 Sep 2019
    3. For illustrative/discussion purposes only. It is not a recommendation to purchase, sell or hold any particular security. It is neither indicative of any portfolio holdings at any one time nor reflective of current or future portfolio holdings.
    4. Source: Bloomberg – Mid July 2019. For illustrative and discussion purposes only.
    5. Team information as of 30 June 2019.
    6. The Fund's performance as of 31 Aug 2019
      • Cumulative 15-Year performance before and after 5% sales charge are 441.22% and 414.16% respectively.
      • Annualised 15-Year performance, before and after 5% sales charge are 11.92% and 11.53% respectively.
      Past performance is not an indicator or a guarantee of future performance.
      Performance data as of 31 August 2019, source: © 2019 Morningstar, Inc. All rights reserved. Fund performance data is for Franklin Technology Fund A (acc) USD, shown in NAV-NAV, in share class currency, include reinvested dividends and are net of management fees. Other commissions, taxes and other relevant costs paid by the investor are not included in the calculations. The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Peer group represented by Morningstar OE Sector Equity Technology Category. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be affected by currency fluctuations. Indices are unmanaged and one cannot invest directly in an index.
    7. Copyright © 2019 Morningstar, Inc. All rights reserved. Overall Morningstar Rating as of August 2019, in the OE Sector Equity Technology Category. Past performance is no guarantee of future results.
    8. Singapore Lipper Fund Awards 2011, 2012, 2013, 2014, 2017, 2018, 2019. All rights reserved. The award is for Franklin Technology Fund A (acc) USD share class only.

    What Are the Key Risks?

    The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments.

    The Fund invests mainly in equity securities of technology companies worldwide. Such securities have historically been subject to significant price movements that may occur suddenly due to market or company-specific factors. As a result, the performance of the Fund can fluctuate significantly over relatively short time periods.

    Other significant risks include: liquidity risk.

    For full details of all of the risks applicable to this Fund, please refer to the “Risk Considerations” section of the Fund in the current prospectus of Franklin Templeton Investment Funds.


    Important Information

    Franklin Technology Fund is a sub-fund of Franklin Templeton Investment Funds (“FTIF”), a Luxembourg registered SICAV.

    This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

    This document is for information only and does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. Any research and analysis contained in this presentation has been procured by Franklin Templeton Investments for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Any views expressed are the views of the fund manager and do not constitute investment advice. The underlying assumptions and these views are subject to change. Franklin Templeton Investments accepts no liability whatsoever for any direct or indirect consequential loss arising from the use of any information, opinion or estimate herein. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested.

    Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance.

    Past performance or any prediction or forecast is not necessarily indicative of future performance of the Fund. Subscriptions may only be made on the basis of the most recent Prospectus and Product Highlights Sheet which is available at Templeton Asset Management Ltd or our authorised distributors. Potential investor should read the details of the Prospectus and Product Highlights Sheet before deciding to subscribe for or purchase the Fund. This shall not be construed as the making of any offer or invitation to anyone in any jurisdiction in which such offer is not authorised or in which the person making such offer is not qualified to do so or to anyone to whom it is unlawful to make such an offer. In particular, this Fund is not available to U.S. Persons and Canadian residents

    Investors may wish to seek advice from a financial adviser before making a commitment to invest in shares of the Fund. In the event an investor chooses not to seek advice from a financial adviser, he/she should consider whether the Fund is suitable for him/her.

    Copyright © 2019 Franklin Templeton Investments. All rights reserved. Issued by Templeton Asset Management Ltd. Registration No. (UEN) 199205211E.

    This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
    Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.

    Copyright © 1999-2019. Franklin Templeton Investments. All rights reserved.