Research-Driven Portfolio
- Concentrated portfolio with approximately 35-40 holdings
- Benchmark indifferent
Overview
- We focus on fundamental bottom-up stock analysis to identify and select quality growth companies with sustainable business models and proven management teams that are focused on the creation of value.
- We utilize the recommendations from this analysis to build a concentrated portfolio of 35-40 stocks that is benchmark indifferent, yet diversified, due to the limited overlap of economic exposures between companies.
- Our in-depth research supports our longer-term perspective, seeking to hold companies for three to five years.
Key Features
Longer-Term Investment Horizon
- Investment horizon of 3 to 5 years
- Typical holding period of 4+ years
Seek to Manage Risk by Limiting Economic Overlap among Holdings
- Select companies whose earnings streams are not highly correlated
- Has typically resulted in a diversified portfolio across MSCI Global Industry Classification Standard (GICS) sectors and industries
Global Opportunity Set
- Search without borders
- Average allocation to emerging markets has been less than 10%
Investment Process
Idea Generation & 360° Research Process
The goal of our 360◦ Research Process is to identify and recommend the most attractive, high-quality sustainable growth companies that can be utilized within our risk framework to build a diversified portfolio. We conduct in-depth research, evaluating companies from multiple angles, and identify companies that meet our strict growth, quality and valuation criteria:
- Growth – Analysts conduct free cash flow analysis to identify the specific drivers that they believe may enable a company to grow faster than its peers over a multi-year period, taking into account the sustainability of the company’s business model, whether the company has a long-term competitive advantage, and if a value-generating reinvestment record exists.
- Quality – Analysts ascertain the financial transparency and accounting quality, corporate governance, and environmental management, social and labor practices.
- Valuation – Consistent valuation approach to determine relative attractiveness of a company and valuation support under different scenarios.
Portfolio Construction & Management
- Benchmark Indifferent – We are benchmark indifferent throughout portfolio construction, with all decisions made at the individual stock level.
- Concentrated, Long Term Focus – With approximately 35-40 holdings, typical position sizes range from 1.5-3.5%. Given our three- to five-year average holding period, portfolio turnover is relatively low.
- Limit Overlap of Economic Exposures – Our risk framework emphasizes diversification and limits the overlap of economic exposures among holdings.
Management Team
Contact us to learn about our investment capabilities
Important Information
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability, and political developments. Investments in emerging markets involve heightened risks related to the same factors and are less liquid.
There is no assurance that the employment of this strategy will result in the investment objective being achieved. Various account minimums or other eligibility qualifications apply depending on the investment strategy or vehicle.
The information contained on this webpage is intended only as a general overview of Franklin Templeton investment capabilities and is for informational purposes only and should not be construed or relied upon as investment advice.
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.
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