Looking for growth? Global growth fund manager provides an answer
Politicians are beginning to look at ways to boost economic growth rather than impose austerity. Don Huber, manager of Franklin Templeton’s Global Growth Fund, explains where he sees the opportunities
Your largest investment by sector is in financials. Why have you chosen this sector, which banks in particular and in what regions particularly are you concentrating your investment?
The Financials sector does have the largest weighting in the Fund, but is as a result of our bottom-up stock selection. It is also the largest sector in the index by a significant margin. Underneath the Financials heading, the Fund’s exposure within the sector is actually nicely diversified including asset managers, exchanges, real estate, commercial banks and insurance.
Despite the headlines regarding the European sovereign crisis and challenges for banks, we continue to see great opportunity in the financial services more broadly and among some banks outside of Europe.
At the end of April, the Fund held two banks – United Overseas Bank in Singapore and Bank of Nova Scotia in Canada. Each of these banks is exceptionally well managed, performed well despite the challenging markets since 2008 and has plans to continue growing their businesses despite an uncertain market environment.
Additionally the Fund had a position in Credit Suisse, which is classified as Capital Markets but could be considered a ‘bank’ as well. The Fund’s exposure to Financials is diversified geographically as well with Intercontinental Exchange, Invesco and American Tower in the US, and Hang Lung in Hong Kong, and Admiral Group in the UK.
Your fund is only invested in one Eurozone country, Italy. What is your view of the current Eurozone crisis? What sectors within Italy do you think have growth potential?
The Fund was invested in Italy, Germany, Belgium and Spain among the Eurozone countries. In addition, the Fund had additional non-Eurozone European exposure to holdings in Switzerland, Sweden and Denmark as outlined below.
As a stock-picker whose process is built on investing in quality companies with sustainable business models for the long-term, we think there are many attractive opportunities in Europe at this point. We have actually increased our exposure over the last year, adding several European-based companies with global businesses that we believe could benefit from secular and cyclical growth over the longer term.
While the current headline-driven trading environment has created heightened volatility on a near-term basis, we remain focused on each company’s potential ability to generate and successfully reinvest free cash flow to create shareholder value.