The outbreak of Covid-19 has forced a number of behavioural changes throughout societies across the globe, including how we work, shop and interact with others. These changes are accelerating existing dynamics at a faster pace, including the drive towards digitalisation of business and consumer behavior. At the same time, the world’s medical and scientific community, including health care, pharmaceutical and biotechnology companies are working more closely together than ever, in response to the COVID-19 virus.
Now, more than ever, we see innovation as the main driving force behind value creation in the global economy, as technology becomes more integrated into business processes and consumer behaviour. Growth-oriented investors need to start investing into innovation across industries to have the potential to outperform the market.
Information technology has been the standout performer during the COVID-19 crisis. Jonathan Curtis, Portfolio Manager and Research Analyst of Franklin Equity Group, discusses why this sector will continue to gain relevance and is well-positioned for the post-pandemic world.
Technology is fueling disruptive innovation, streamlining outdated processes, and creating new possibilities. We are in the middle of a period of unprecedented innovation where numerous technology-driven themes are starting to disrupt various industries.
While new technologies have already changed our world, the pace of innovation is continuing to accelerate. The coming decades will feature even more growth in digital technologies, tools, and services. Where are the potential investment opportunities?
Artificial Intelligence
Enables data analysis using automated computing processes at scale
Examples: Alibaba, Facebook, Google1
Cloud Computing
Supports companies in scaling their digital businesses globally at a low cost
Example: Amazon1
Financial Services (Fintech)
Key to new commerce growth, allowing for digital transactions
Examples: Tencent1
Internet-of-Things (IoT)
A rich source of consumer and business process data
Example: Qualcomm1
Software as a Service (SaaS)
Provides enterprises with a more efficient way to attract new customers while scaling operations
Examples: Salesforce1
E-commerce
Connects buyers and sellers no matter how far apart
Example: MasterCard, Alibaba1
Medical Technology
New pharmaceutical technologies offer new treatment options for patients and advancements in healthcare
Examples: Illumina Inc.1
As technology becomes more integrated into business processes and consumer behaviour, the pace of innovation will continue to accelerate.
Here are the key reasons why investors need to start investing in innovation.
From process automation to big data, digitalisation shapes our world today. More and more businesses are embarking on the digital journey and adopting digital tools to remain competitive.
The sector is dominating the equity markets and will continue to grow as a result of the digital transformation megatrend. Today, seven out of the ten most valuable companies are technology related.
We see exciting developments to come in gene therapy, immuno-oncology and platform companies, with new ways to deliver functional cures for genetic disorders, new therapies for cancer treatment and disease treatment.
The cost of gene sequencing—the mapping of DNA for diagnostic and curative purposes—has fallen dramatically, creating rich set of opportunities for companies that benefit from this trend.
As the cost of sequencing a gene has declined, the investable universe has expanded from equipment and tools to contract resourcing, organisation, diagnostics, and therapeutics.
The expansion of investment opportunities is only beginning.
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.
We see these themes evolving at different paces and becoming investable at different times. Thus, we offer a full range of equity funds that are actively managed to help guide investors into these themes. Check which one best suits your investment needs.
20
years
since launch
Identifies high-quality technology companies worldwide
Capitalizes on investment opportunities arising from digital transformation
Focuses on three leading growth themes cloud computing services, the internet of things and e-commerce
20-year anniversary in April 2020
20
years
since launch
Invests in leading growth companies located in the US - the world‘s largest and most resilient equity market
A well-diversified, multi-cap, multi-industry portfolio
Leading growth fields in focus are technology, biotech and communications
Track record since 2000
20
years
since launch
A single-industry-focused fund that invests in biotechnology companies across all market capitalisations
Seeks potential growth from recent breakthrough developments
Focuses on biotechnology, emerging pharmaceutical, medical technology and life science tool companies
Long fund history since 2000
New
Fund
Focuses on global e-commerce, genetic breakthroughs, intelligent machines, new finance, and exponential data
A broadly diversified growth portfolio
Launched in 2019 – mirrors a similar fund sold in the US with a successful track record since 1968
*Sub-funds of Franklin Templeton Investment Funds, a Luxembourg-registered SICAV ("FTIF").
Technological and digital trends are changing our world at a faster pace than many investors expect. Franklin Templeton’s location in Silicon Valley and San Francisco Bay area gives our team unparalleled access to the world’s largest and well-established technology and biotechnology companies, research universities and venture capitalist firms. This access helps to see investment opportunities and technology-driven disruption before the broader markets.
Headquartered in the middle of the Silicon Valley, the team is located in the proximity of leading technology companies, research universities and Venture Capital firms. This access helps to see investment opportunities and technology-driven disruption before the broader markets.
30
Sector
Experienced sector experts conduct in-depth research and provide industry coverage across all market caps and styles.
To invest or find out more, you may approach one of our Franklin Templeton authorised distributors:
Change is happening rapidly, active management helps us identify and capitalize on significant inflection points.
COVID-19 and the resulting economic crisis has caused an acceleration in digital transformation.
Innovation has always been a key driver for the biotechnology industry, even in the midst of the COVID-19 pandemic.
Footnotes
What Are the Key Risks?
For the key risks of the various funds mentioned above, please click on the fund documents above.
Important Information
Franklin Innovation Fund, Franklin Biotechnology Discovery Fund, Franklin Technology Fund and Franklin U.S. Opportunities Fund are sub-funds of Franklin Templeton Investment Funds ("FTIF"), a Luxembourg registered SICAV.
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