Franklin Templeton believes artificial intelligence-driven technology solutions will unleash disruption in multiple industries to spur new growth in coming days.
Jonathan Curtis, Senior Vice-President and director of Portfolio Management of Franklin Equity Group, said the fund house believes Al is a key pillar of the digital transformation that is driving significant disruption in various industries while spurring new growth and there are opportunities for companies to increase productivity, lower costs and ultimately drive competitiveness in this generative Al.
Other areas of investment the fund house is focused on are healthcare, which is backed by multi-decade demand trends from an ageing population worldwide, and in energy, as the world moves towards more renewable, sustainable energy platforms, he added.
In the second half of 2023, there is a potential for greater market breadth as investors regain confidence that the Fed’s interest-rate tightening cycle is closer to the end and that the fundamental risk to earnings may be lower than feared, provided the economic situation shows signs of stabilisation, said Curtis in an interaction with media.
Active management
Active management allows Franklin Templeton to pursue opportunities that can deliver positive long-term results by uncovering high-quality companies capable of becoming market leaders.
The focus on major secular themes such as digital transformation and health care innovation, lead the fund house to invest in both established and emerging growth players in various sectors. In terms of portfolio positioning, the focus has been less on absolute growth and more on profitability, margins, cash flows and revenue/ earnings visibility, he said.
“We are mindful of the potential lagging impact of the Fed’s rate increases on economic growth, but we remain cautiously optimistic that the US economic strength is sustainable,” he said.
In broad terms, the fund house continues to see consumers and corporations adjust to the changing economic environment, particularly in highly cyclical segments of the market. It believes that idiosyncratic factors will drive returns this year as opposed to macro factors, which may lead to high asset correlations.
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Published on September 12, 2023
