FRANKLIN TEMPLETON fund delivered 32% in just a year

Fund manager Jonathan Curtis has made some serious money for investors in the recent past. And while he believes it might get harder to make returns from here on in because of inflated company valuations, he is adamant that the case for investing in technology stocks remains a compelling one. 

Curtis, based in California’s Silicon Valley – the home of many global tech companies – is manager of Franklin Technology, a £3.7billion investment fund that invests across the globe. Over the past year, he has generated a return of 32 per cent for investors while over the past five years he has turned a £1,000 investment into £3,300. 

Like other investment experts, Curtis accepts that many technology stocks – especially those in the United States – are trading at a premium compared to other big listed companies. ‘Are we paying a fair price for tech companies at the moment?’ he asks. ‘Maybe, they are higher than I would like but they are not crazy. Share prices do not feel out of control.’ 

Yet he concedes that with a US presidential election in November, stock markets will be volatile, triggering sharp price movements on leading tech shares. But unlike some he is not fazed by the prospect of Democratic candidate Joe Biden winning. ‘Yes, Trump has been business friendly,’ he says, ‘but Biden would probably pave the way for an enormous spend on infrastructure. That, in turn, would be good for many technology stocks.’ 

The Franklin fund has 75 holdings, 65 of which are listed. The rest are private companies that make up 2 per cent of the portfolio. The fund is heavily US-centric and has key holdings in traditional tech stocks – the likes of Amazon, Apple and Microsoft. But Curtis says there is ‘lots of action’ elsewhere. He points to a number of belowthe-radar US holdings that have been key recent drivers of the trust’s overall performance – electronics agreement company DocuSign, website security specialist Cloudflare and software company ServiceNow.  

All three, he says, have thrived as a result of the surge in digital-based services during the coronavirus pandemic. 

‘DocuSign has helped businesses move from paper-based documents to those that can be digitally stored and signed,’ says Curtis. ‘It’s a super powerful service in the current environment. Cloudflare offers security software that has been invaluable to many companies which have turned to the internet to do business. ServiceNow has also helped firms become more efficient by digitalising certain business processes.’

Although private companies are normally off the radar of most investment funds, Curtis says such investments provide an important insight into the use of technology to create new services. ‘These companies are often trying to develop a new market. It allows us as managers to stay ahead of the curve,’ he adds. 

Curtis believes the pandemic has speeded up digitalisation – ‘we’ve seen two years of digital transformation take place in little over two months’ – and he sees nothing that will inhibit its growth. ‘It will continue to throw up new opportunities,’ he predicts. 

The fund’s ongoing annual charge is 0.9 per cent and shares – denominated in dollars – can be bought through platforms such as Hargreaves Lansdown. 

Fund Calibre’s two top technology fund recommendations are Axa Framlington Global Technology and Smith & Williamson Artificial Intelligence.