Fund Rationale: Franklin Technology Fund

Franklin Technology Fund (the "Fund")
SGD Hedged Class A Accumulation Shares (ISIN: LU1803068979)
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Endowus has selected the Fund as it offers:

  • Systematic investment process of primarily bottom-up analysis to identify a concentrated number of long-term, high-conviction leaders and innovators in more than 20 compelling sectors and themes;
  • Relatively concentrated portfolio including allocations to private companies up to 5~10% of the portfolio;
  • Highly experienced and large team dedicated to a wide and deep coverage on the various identified sub-sectors;
  • ESG integration to identify material risks specific to each sector covered; and
  • Retail share class with 100% trailer fee rebated back to Endowus investors to achieve lower cost of access.

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Key Information

Fund Objective: The Fund aims to achieve capital appreciation by investing primarily in equity securities of companies expected to benefit from the development, advancement, and use of technology.

Suitability: Investors who seek capital appreciation, seek a growth investment in the technology sector in the US and around the world, and plan to hold their investment for the medium to long term.

Cost:
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  1. Total Fund-level Fees include fund management fee of 1.50%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus do not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 3 April 2000
Share Class Inception: 6 April 2018
Benchmark: MSCI World Information Technology Index

Fund AUM: SGD 12.3bn
Source: MorningStar as of 31 May 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 31 May 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.

Selection Criteria

Endowus has selected the Franklin Technology Fund as it gives investors access to the best ideas in major sub sectors that drive the technology sector in the long term, and is run by a highly experienced and dedicated team of more than 12 investment professionals.

The team starts with a thematic approach seeking out the most compelling themes in the technology universe favoured by structural growth, then combines bottom-up research to further identify companies that are well-positioned to be leaders and innovators in the sub-sectors in the long run, with emphasis placed on the fundamental quality, growth prospects, and attractive valuations of the companies. While the resulting portfolio consists of 60 to 90 high-conviction names, the team works with an active mandate to construct a diversified portfolio with exposures to more than 20 different sub-sectors and across market capitalisations, with up to an allocation of 5% in private companies. Investors may notice the heavy allocation of the portfolio into US companies that may imply a high country risk -- however, as the team actively evaluates companies with a global revenue source, it is more accurate to view the portfolio as more geographically diversified.

We also like the ESG analysis embedded in the investment process; the dedicated ESG team at Franklin Templeton provides the team with ESG grades on potential holdings, using proprietary assessments that are customised for each sub sector to reflect the most accurate material risks. The ESG risks are reflected in the fundamental analysis of each company that dictate their sizings within the portfolio, while companies with room for improvement are further taken for ESG engagements.

While the strategy is run by Jonathan Curtis, a 28-year industry veteran with a background in electrical engineering, and further supported by two Co-PMs (Dan Searle and Matthew Cioppa), the team emphasises the collaborative and horizontal approach in their coverage -- each team member, including the PMs, assumes an analyst role and specialises in a selection of sub-sectors, and uses their domain expertise in evaluating the best ideas in the various sub sectors. The sheer size of the 12-member team allows for a broad and deep assessment of the various sub sectors within the technology industry, and their knowledge base is further augmented by their proximity to Silicon Valley where the team gains easy access to the latest sector developments and face-to-face meetings with promising public and private companies.

The Fund, in line with its investment objective, has a good track record of delivering top-tier returns over the long term compared to its peers and benchmark. It should be noted that due to the portfolio’s tilt towards mid to small cap companies, the historical volatility levels of the portfolio has not been the lowest, although all in all, investors will be rewarded by the portfolio’s favourable risk-adjusted returns over the long run.

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Updated by Endowus: June 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
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