Quality over chaos: why quality companies matter for your next investment

During periods of market volatility and some political uncertainty, investors are often left wondering: where to put their money? Focusing on quality could be the key to long-term success and our Inside Story series gives you access to valuable insight on leading companies in our portfolio and what makes them exceptional.

The question is: where to invest right now? Which sectors, which companies? The significant volatility in the markets, paired with geo-political instability linked to the tariffs on/tariffs off headlines, can make investors unsettled, especially if their portfolios have recently taken a hit. With thousands of funds to choose from, it is easy to feel overwhelmed and anxious about making the wrong choice or mis-timing the market. After all, not everyone has a team of expert analysts on hand!

If you're considering your ISA investments this year, here's my simple takeaway: think quality, think global.  Here's why.

Think quality – companies with competitive advantages and corporate strength

The recent market jitters follow a period of high growth and returns driven by US markets, principally from 7 big tech companies known collectively as the Magnificent 7.  This correction could present a great opportunity for savvy investors - just in time for the end of the tax year and the renewal of ISA allowances. The key to navigating such turbulence is focusing on the quality of the companies in a fund or portfolio – that is what drives share portfolio returns in the long term, after all.

Quality, in investment terms, means selecting businesses with solid earnings, market leadership positions in their segments, quality management, and a clear competitive advantage that can be defended from competitive pressures. These businesses are better equipped to withstand volatility and emerge stronger when markets shift. They are built for long-term growth, not short-term fads.

Take Ferrari as a perfect example. It is an iconic brand that consistently sells its products at a premium price. With its order books filled for years, Ferrari exemplifies a company with a long-term growth model, operating within a stable market, and positioned to thrive regardless of market fluctuations.

Think global: the freedom to select from the world’s best

Investing globally allows portfolio managers to select the best companies across all sectors, just like a football manager can pick the most talented players for each position. A football manager builds the strongest team possible by sourcing talent worldwide—whether it is a top goalkeeper from Spain, a world-class striker from Brazil, or a midfield maestro from Germany.

In much the same way, Franklin Global Trust can take a global approach, enabling diversification across all geographies and the freedom to select from the world’s best companies. This enables the Trust’s portfolio to be built on the best ideas – where we have identified resilient companies across the globe, with the potential for further long-term success.

Megatrends: investment opportunities that last for decades

Given that incredible breadth of opportunity, to ensure focused research and analysis, we have identified major megatrends.  These are long-term, global shifts that provide multi-decade growth opportunities. These trends often transcend political cycles, making them more reliable and less vulnerable to short-term disruptions. By identifying and investing in companies aligned with these megatrends, investors can ensure their portfolios are positioned for sustained growth.

For instance, Artificial Intelligence (AI) is transforming industries and driving rapid innovation. The rise of AI presents new opportunities for companies like Nvidia, a leader in microchip design, and Sartorius Stedim, which helps pharmaceutical companies develop life-saving medications faster and more sustainably.

The Energy Transition is another major trend. As the world moves toward decarbonisation, global demand for renewable energy is skyrocketing. The proportion of energy sourced from renewables needs to increase from 25% today to over 90% by 2050. Companies like Hexagon, which designs virtual reality tools to optimise resource usage and reduce carbon footprints, are well-positioned to lead in this critical shift.

Finally, the ageing global population is driving increased demand for healthcare innovation. As chronic diseases like diabetes, cancer, and obesity rise, companies at the forefront of genomics and medical advancements are tapping into a growing and increasingly profitable market.

Focused on long-term wealth creation

At Franklin Global Trust, the goal is simple: focus on high-quality companies that are built for growth and resilience. The Trust’s concentrated portfolio of around 30 companies strikes a balance between diversification and a focused strategy, with each company contributing to long-term success.

To help you understand the businesses behind the portfolio, Martin Currie has launched an ‘Inside Story’ series - a collection of short videos providing exclusive insights give investors a closer look at what makes these businesses exceptional and why they are worth backing.

So, the next time you watch a team sport it can be a timely reminder that success is about having the right blend of quality. In investing, this means carefully selecting quality companies that are positioned to thrive and grow in the long run and balancing the positions to perform.

Focus on the best, and the rest will follow.

Think Quality, think global, think Franklin Global Trust.

 Find out more at franklinglobaltrust.com/our-views/stock-stories