We’ve seen economic data in recent months moderate after record growth in the first half of 2021. While this moderating economic data is something we’re paying attention to, we see this as really a direct impact or result of the rise of COVID rates in the US, specifically the Delta variant. While we are paying attention to this, we do view this as much more of an economic pause than a broad-based pullback and we would expect economic growth to pick up in the second half of the year and into 2022.
We’re sensitive to rising valuations and we’ve become more selective in our approach, specifically focusing on high quality businesses with sustainable drivers of growth that may not be reflected in current valuations.
Many of these investments are levered to strong secular growth themes that we believe will deliver consistent growth throughout the market cycle.
As we move from an analog based world to a digital one, numerous investment opportunities are being created across all sectors, not just the technology sector.
In financials,1 the rise of many fintech companies and the growth of digital payments has really disrupted the traditional banking industry, creating new options for consumers. We view many of these fintech businesses as still being in the early days of the disruption.
In the health care sector,2 we’re finding new investment opportunities that are meeting the growing global demand for health care with innovation and technology. While biotech and genomics are showing tremendous promise with new treatments and cures, the medical device and technology industries are investing heavily in research and development to reimagine the health care system of the future.
During the pandemic, consumers were introduced to a tremendous number of new options on how to buy and sell goods, how to access healthcare, engage in home exercise or entertainment.
We believe that we will likely observe a big reshuffling of spending patterns in the years ahead, as consumers embrace many of these new options they discovered over the last year.
Another area of interest is industrials.3 The reshoring of the global supply chain is another major theme that we’re focused on. The COVID-19 pandemic exposed many weaknesses of the global supply chain, specifically in the areas of health care. We think that over the next few years, many of these industries, starting with health care but broadening out over time, look to reshore back to the United States.
De-urbanization is another theme on our radar. We’ve We are observing a shift in the way the millennial generation has chosen to live, away from a more urban-centered lifestyle to a one that is more suburban in shape. This trend will likely play out over the next 5-10 years and has significant implications to many industries.
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What Are the Risks?
Franklin Growth Opportunities Fund
All investments involve risks, including possible loss of principal. Growth stock prices reflect projections of future earnings or revenues, and can, therefore, fall dramatically if the company fails to meet those projections. To the extent the fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Smaller, mid-sized and relatively new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Historically, these securities have experienced more price volatility than larger company stocks, especially over the short-term. These and other risks are described more fully in the fund’s prospectus.
Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial professional, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.
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1. As of 6/30/21, the financials sector represented 6.80% of Franklin Growth Opportunities Fund. Portfolio holdings are subject to change without notice and may not represent current or future portfolio composition.
2. As of 6/30/21, the health care sector represented 15.99% of Franklin Growth Opportunities Fund. Portfolio holdings are subject to change without notice and may not represent current or future portfolio composition.
3. As of 6/30/21, the industrials sector represented 7.06% of Franklin Growth Opportunities Fund. Portfolio holdings are subject to change without notice and may not represent current or future portfolio composition.
