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Staying Ahead of Digital Transformation

Despite increased volatility due to the Russia-Ukraine war and rising interest rates, Jonathan Curtis, Portfolio Manager of Franklin Technology Strategy, sees compelling opportunities within high-quality technology companies.

The R.U.L.E of Tech Investing

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Why Invest in Technology?

Widespread Adoption of Technology

From process automation to big data, digitalisation shapes our world today. Techonology is fueling disruptive innovation, streamlining outdated processes, and creating new possiblities. Over the past few decades, the way we live has already been altered by new developments.

2021: What happens in an Internet minute1

One of the characteristics of modern life seems to be that we are moving at an ever-increasing rate. Multitasking is becoming the norm as the amount of information and data shared over the internet rises substantially, and it continues to grow.

Digital Economy Outpaces Traditional Industries in the U.S.

Digital transformation was underway in the pre-COVID environment and accelerated in an era of global social distancing. For the first time in history, we see an acceleration in e-commerce adoption despite GDP declining globally.

As technology-led behaviours continue to play an important role in our lives coming out of the pandemic, digital economy is deemed to be one of the strongest economic drivers.

The race to 50 million users (in years)3

For most innovations of our history, we can measure success by the level of users. Reaching 50 million users mark is a sure sign of triumph, however how long does it usually take to reach this number?

In today’s tech-fuelled and tech-led world, top products are reaching high levels of consumers in incredibly short amounts of time.

Big Tech Revenue Continues to Grow as Pandemic Persists

Over the next decade, we expect hundreds of billions of “edge devices” to be deployed, an explosion of data generation, and new approaches to computing to sustainably process and create value from all the data that’s available.

Valuation Remain Attractive and Tech Firms have Proven Profitable

The information technology (IT) sector topped all 10 other equity sectors by a wide margin in 2021.

We believe the overall IT sector is appropriately valued for the good growth and quality that it offers. In our view, the IT sector has many excellent established, cash- and earning-generating businesses.

Tech Valuations Elevated, But Not Excessive

Tech Firms have become very profitable

Capitalising on Technology

Franklin Technology Strategy

  • Identifies high-quality technology companies worldwide

  • Capitalises on investment opportunities arising from digital transformation

  • Focuses on four leading growth themes artificial intelligence, cloud computing, services, Internet of Things, and e-commerce

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Franklin US Opportunities Fund*

  • Invests highest-quality growth companies located in the US

  • A well-diversified, multi-cap, multi-industry portfolio

  • Leading growth fields in focus are technology and healthcare

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Fund Documents

*Feeder fund that feeds into Franklin Templeton Investment Funds – Franklin U.S. Opportunities Fund (Target Fund), a Luxembourg-registered SICAV

Next Steps

Capitalise on the potential of technology sector, speak to a relationship manager at any of our participating distributors:

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Footnotes

  1. Source: Visual Capitalist, https://www.visualcapitalist.com/from-amazon-to-zoom-what-happens-in-an-internet-minute-in-2021/,  as of 10 November 2021. For illustrative and discussion purposes only. The information provided is not a recommendation to purchase, sell, or hold any particular security and should not be construed as an endorsement of or affiliation with Franklin Templeton.
  2. Source: US Bureau of Economic Analysis (BEA). Latest available information as of 28 June 2021, as calculated by BEA for the period 2005 –2019. Digital economy segment is an add-on segment estimated by the BEA, and comprises digital-enabling infrastructure, e-commerce transactions and digital media. (https://www.bea.gov/data/special-topics/digital-economy).
  3. Source: Statista, https://www.statista.com/chart/14395/time-innovations-needed-for-50-million-users/, as of 22 June 2018. For illustrative and discussion purposes only. The information provided is not a recommendation to purchase, sell, or hold any particular security and should not be construed as an endorsement of or affiliation with Franklin Templeton.
  4. Source: Company filings, for quarter ended 31 March 2022. For illustrative and discussion purposes only. The information provided is not a recommendation to purchase, sell, or hold any particular security and should not be construed as an endorsement of or affiliation with Franklin Templeton.
  5. Source for Price-to-Earnings Ratio: © 2022 FactSet, as of 31 March 2022. Price-to-Earnings Ratio is based on an estimate of Next-Twelve-Months (NTM). Copyright © 2022, S&P Dow Jones Indices LLC. All rights reserved. See www.franklintempletondatasources.com/ for additional data provider information. Past performance is no guarantee of future results. Indices are unmanaged, and one cannot invest directly in an index. Source for recessions: National Bureau of Economic Research, as of 19 July 2021.
  6. Source for Earnings-Per-Share: © 2022 FactSet, as of 31 March 2022. Earnings-Per-Share is based on an estimate of Next-Twelve-Months (NTM). Copyright © 2022, S&P Dow Jones Indices LLC. All rights reserved. See www.franklintempletondatasources.com/ for additional data provider information. Past performance is no guarantee of future results. Indices are unmanaged, and one cannot invest directly in an index. Source for recessions: National Bureau of Economic Research, as of 19 July 2021..

Important Information

Indices are unmanaged and one cannot invest directly in an index.

This webpage is for information only and does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. Any research and analysis contained in this webpage has been procured by Franklin Templeton or its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Any views expressed are the views of the fund manager and do not constitute investment advice. The underlying assumptions and these views are subject to change. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from the use of any information, opinion or estimate herein. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not an indicator nor a guarantee of future performance.

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