The Board of Franklin Global Trust has announced a potential restructure of the Company. Read the announcement for full details.
It’s a diverse mix of companies that includes American Tech giants, a supercar manufacturer and Industrial Gas producer. And we also outline some of the megatrends - the multi-decade growth themes - that the companies align to.
Each company is a long-term holding in Martin Currie Portfolio Trust, an actively managed portfolio of 25-40 investment ideas from around the world. The shares of these companies may have performed well historically but this information should not be considered as a recommendation to purchase today. It should not be assumed that any of the companies discussed will prove to be profitable in the future.
First purchase: 2022 / Current portfolio holding: Yes
NVIDIA is a renowned technology company known for its cutting-edge graphics processing units (GPUs). Initially focused on gaming graphics cards, NVIDIA has evolved into a prominent player in the tech industry, also known for its cutting-edge Artificial Intelligence (AI) technologies
The company's GPUs are widely used for high-performance computing, scientific research, and data centre applications. NVIDIA's commitment to innovation has solidified its position as a key player in the tech industry, with a range of products designed to empower visual computing and AI advancements.
The chip, graphics processor unit and software maker surpassed US$1 trillion market capitalisation for the first time in history in 2023. Beyond hardware, NVIDIA provides software solutions which facilitate GPU programming, and advanced libraries for machine learning and scientific computing.
And Nvidia is rapidly becoming the leader for AI amid the soaring demand for generative AI as enterprises race to develop new tools. The company has unveiled its AI Cloud Service, an offering which could be beneficial for its software sales and cloud strategy.
We see alignment to our Future of Technology megatrend and to several long-term sub-themes including Gaming, Cloud Computing, AI and Autonomous Vehicles.
The inside story on the leading companies in our global portfolio and why they offer sustainable, long-term growth potential.
First purchase: 2019 / Current portfolio holding: Yes
US software company Microsoft is a global technology giant, with a diverse portfolio of products and services, consistent revenue growth, and strong financials. With a market capitalisation that consistently ranks it among the largest publicly traded companies globally, it has benefitted from a new golden era of investment in technology.
The company's revenue streams include Windows, Office 365, Azure (its cloud computing platform), and gaming platforms like Xbox. Azure's remarkable growth positions Microsoft as a leader in the cloud industry, with increasing adoption across enterprises.
Microsoft's commitment to innovation and its expansion into emerging technologies like AI, blockchain, and quantum computing indicate long-term growth potential. A strategic move toward subscription-based models has improved the company’s pricing power and its competitive positioning.
Microsoft's strategic acquisitions, like LinkedIn and GitHub, expand its reach and capabilities. We believe that the company's robust balance sheet, efficient cost management, and diversified business model has improved its resilience to economic downturns.
The share price has recently benefitted from expectations that generative AI would accelerate a fundamental shift in datacentre technology at cloud providers such as Microsoft, who also has a stake in OpenAI, the company behind ChatGPT.
There are many sub-theme opportunities in our Future of Technology megatrend that Microsoft is aligned to. Thes include Cloud, Data & AI, Quantum Computing, Platforms and Blockchain & Crypto.
First purchase: 2018 / Current portfolio holding: Yes
Established in 2018 by the merger of Germany's Linde AG and the US's Praxair, Linde is a global leader in industrial gas production. With a resilient and diversified presence in Germany and the Americas as well as fast-growing emerging markets.
Linde has developed strong pricing power due to its dominant market positions in various global markets. During the COVID-19 pandemic, Linde supplied medical-grade oxygen.
It plays a significant role in the hydrogen value chain and is well positioned to benefit from the transition toward low-carbon energy sources which we predict to impact its business in the late 2020s.
Linde's stability in economic fluctuations stems from the essential nature of industrial gases across sectors. Price inelasticity results from gases representing a small portion of customers' Cost of Goods Sold (COGS). The company's 'take-or-pay' and 'facility fee' client contracts can cushion revenues during economic downturns. Linde's focus on healthcare and food and beverage sectors, accelerated by the merger, diversifies revenue streams.
It aligns with our megatrends of Resource Scarcity and Demographic Changes and is exposed to the Climate Change sub-theme by promoting energy-efficient operations in the hydrogen value chain.
Linde's involvement in industrial production aligns with the Physical Infrastructure theme, backed by global government spending programmes. Furthermore, its presence in Asian and South American markets positions it to benefit from the Growth in Emerging Middle Class theme.
First purchase: 2018 / Current portfolio holding: Yes
The Italian supercar manufacturer, Ferrari, has built an iconic brand that provides pricing power in the luxury car market. This drives demand for its exclusive and limited edition models. It plans to boost average selling prices by expanding Special and Icona series, already priced at a premium.
Ferrari’s approach to Environmental. Social and Governance (ESG) has been a focus of our engagement, particularly the areas of carbon footprint and fossil fuel usage. Petrol driven engines have been key to the brand and the industry is facing tighter regulation on emissions standards, and the introduction of clear timelines banning the sale of new combustion engine cars.
In 2022, Ferrari increased the share of hybrid powertrains from 20% to 35%, aiming for a 60% hybrid and electric mix by 2026. Their first all-electric Ferrari is set to launch in 2025. Its first hybrid the SF90 Stradale is its best-selling model.
Their inaugural SUV model, the Purosangue, has been developed in an attempt to gain market share in China, targeting high-net-worth individuals who prefer chauffeur-driven vehicles. Orders have been extended into 2025 following strong initial demand.
Ferrari’s top three sub themes play primarily into the megatrends of Demographic change and Resource scarcity. We judged Ferrari as being well-positioned to harness the Growth in EM middle class growth over the next ten years where there is the highest growth of high- net- worth individuals.
It plays to the Vanity sub-theme through its strong brand equity built on a strong heritage and the legacy of Enzo Ferrari, making Ferrari a premier luxury name. In Electric vehicles Ferrari has entered the hybrid and electric markets.
First purchase: 2018 / Current portfolio holding: Yes
Another European luxury brand, Moncler, is a renowned outerwear manufacturer of premium down jackets. It was one of the first stocks introduced under the tenure of Portfolio Manager, Zehrid Osmani.
Moncler has a track record of pricing power and is strategically focused on potential growth in Asia. With 40 existing stores and expansion plans, China remains a key market, especially as the nation recovers post-lockdown. The Asian consumer's recent return to global travel has benefited Moncler, which faced challenges during COVID-19 lockdowns.
The company has a commitment to innovation, product development and strong marketing capabilities. It also has a clear focus on the sustainable sourcing of raw materials. Management has been able to preserve margins through prudent inventory management limiting end-of-season markdowns.
Moncler aligns with our Demographic Change and Future of Technology megatrends, particularly the sub-theme of Growth of EM Middle Class.
It has also been exposed to Vanity through the universal demand for luxury goods and Retail Metamorphosis through its digital strategy combined with inventive brand and exposure to evolving consumer trends.
Our investment team has developed a unique framework built around three growth megatrends that we believe encompass a range of multi-decade growth opportunities. Demographic Changes, Future of Technology and Resource Scarcity. Then we divide into key sub-themes and map the portfolio holdings against these.
Find out more about our framework Managing a world of growth opportunities
The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities discussed here were, or will prove to be, profitable.
Subscribe to receive email containing portfolio manager insights, market updates and relevant information about Franklin Global Trust.
This information is issued and approved by Franklin Templeton Investment Management Limited (FTIML). It does not constitute investment advice. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were or will prove to be profitable. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice. Past performance is not a guide to future returns.
The return may increase or decrease as a result of fluctuations in the markets, in currency and/or in the portfolio. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested. The analysis of Environmental, Social and Governance (ESG) factors form an important part of the investment process and helps inform investment decisions. The strategy does not necessarily target particular sustainability outcomes. The opinions contained in this document are those of the named manager(s). They may not necessarily represent the views of other managers, strategies or funds. Shares in investment trusts are traded on a stock market and the share price will fluctuate in accordance with supply and demand and may not reflect the value of underlying net asset value of the shares. The majority of charges will be deducted from the capital of the company. This will constrain capital growth of the company in order to maintain the income streams.
