Franklin Technology N Acc EUR

Analyst Report
Morningstar's Take
|25/11/2020

by Fatima Khizou


A short track record of a relatively new lead manager keeps Franklin Technology’s Morningstar Analyst Rating at Neutral across all its share classes including the W USD clean share class. Jonathan Curtis took over the day-to-day management of this strategy from former lead manager JP Scandalios in September 2018. Curtis and James Cross were added as comanagers to this offering in 2016, when Scandalios’ portfolio management responsibilities increased through his appointment as comanager on Franklin Small-Mid Cap Growth, alongside longstanding manager Ed Jamison. Upon Jamison’s retirement in December 2018, Scandalios was appointed sole manager on Franklin Small-Mid Cap Growth, thereby reducing his focus on this strategy. Although no longer involved in the day-to-day management of this offering, Scandalios remains a named manager and a member of the technology and telecommunications team. Lead manager Curtis joined the group in 2008 and brings strong expertise in the sector, but this is his first-time managing money. He runs this strategy with the help of a broad and experienced bench of managers/analysts who source and vet investment ideas. Curtis follows the same investment approach used by former lead manager Scandalios, combining industry trends assessment with detailed bottom-up fundamental research. Each analyst is tasked with evaluating the long- and short-term growth characteristics of their respective subsector, considering aspects such as the supply chain. This research effort, headed by Curtis, aims to identify attractive subsectors. It is then followed by detailed bottom-up fundamental research, which focuses around three key criteria: growth, quality, and valuation. The manager is long-term focused and pays little attention to the MSCI World Information Technology benchmark when constructing the portfolio. Individual positions generally do not exceed 5%, thus limiting stock-specific risk. Under Curtis’ watch through the end of October 2020, returns for the W USD clean share class comfortably beat the MSCI World Information Technology Index and Morningstar Category peers on both absolute and risk-adjusted terms. Stock-picking has been the main driver and was particularly strong within the application software, IT consulting, and internet services and infrastructure segments.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleNiche player. The focused nature of sector-specific funds means they are typically best suited to playing a small part in a broader portfolio.
Morningstar Pillars
PeopleAverage
The lead manager has a short tenure.
ParentAverage
A shrewd acquisition, but some uncertainty remains.
ProcessAverage
A sound approach, but execution under a relatively new hand continues to earn an Average rating.
Performance
Encouraging results but it is still early.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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