Home / Equities / Pandemic shift turns ‘temporary’ into structural growth

Pandemic shift turns ‘temporary’ into structural growth

Equities

The value renaissance has been the topic du jour in the financial press since the vaccine-led recovery began in November 2020. After decades of underperformance, a short but powerful rally has taken some of the ‘lustre’ off growth stocks, says Francyne Mu, portfolio manager of the Franklin Global Growth Fund.

  • The Global Growth strategy, which implements a high-conviction approach to investing into high-quality, fast-growing companies, recently reached $1 billion in assets under management, joining stablemate, the Franklin Absolute Return Bond fund, in the billion-dollar cohort.

    The result is another vote of confidence for a strategy that delivered market-leading returns amid the pandemic in 2020, resulting in the fund winning the Global Equities Fund of the Year award issued by research house Morningstar. All the more powerful was the fact that the strong performance was achieved without an exposure to the highly popular FAANG stocks.

    The question now, however, is where to from here?

    Are we set for a decade of outperformance by ‘value’ over ‘growth’? Is growth overvalued in a rising bond yield environment? According to Mu, the thesis for growth investing is ‘as strong as ever’. She highlights a growing misconception that ‘temporary tailwinds’ like online shopping during lockdowns were just that, temporary, pointing to evidence that they may well be structural.

    Commenting on the opportunity set, Mu explains she has the same level of conviction today as during the worst of the pandemic. The key trends of focus for Franklin are e-commerce, cyber-security, online education and digital payments, with Mu noting that the “pandemic served to accelerate” these trends, but that they also remain “well-positioned for substantial growth.”

    Commenting on the growing opportunity set in cyber-security, she notes that the Work-From-Homr shift that occurred will result in more flexible work “sticking” as companies are forced to build more mobile workforces.

    “To capitalise on these long-term secular growth trends, we employ in-depth, bottom-up research to uncover high-quality growth companies that have both the technological and operational prowess to build lasting competitive advantages in these areas,” she says.

    It is this focus on innovation and competitive advantages that sees the strategy differ significantly from many of the most popular global equity strategies in Australia.




    Print Article

    Related
    Market snapback likely to be ‘short-lived’, short positions warranted: Sage

    With bad news priced in, long-short manager Sean Fenton is positive on returns.

    Drew Meredith | 18th Aug 2022 | More
    ‘If we have to, we’ll drive the bus’: Putting money to work in the dislocation

    HMC Capital sees “fantastic opportunities” in current market dislocation.

    Staff Writer | 18th Aug 2022 | More
    Global advice business models on the cusp of change: KPMG

    “Fragmented” service models for advice groups will soon coalesce into three distinct business models according to KPMG’s Future of wealth management report.

    Tahn Sharpe | 18th Aug 2022 | More
    Popular
    1
    Top hedge fund award goes to L1 Capital
    Greg Bright | 13th Dec 2021 | More
    2
    Advisers urged to tread carefully with ‘wholesale investor’ status
    Staff Writer | 28th Jul 2022 | More
    3
    MAX Award winners and the new world outside
    Greg Bright | 13th Jun 2022 | More
    4
    INDepth with Andrew Lockhart from Metrics Credit Partners
    The Inside Adviser | 30th Jun 2022 | More