Because it stimulates and energizes the productivity of organizations and industries, technology is a particularly buoyant investment theme for investors. But which segments stand out and what should be considered in the coming years? Jonathan Curtis, portfolio manager and research analyst at Franklin Equity Group, discusses the ins and outs of an ecosystem worth watching closely.
BFM Business: The technology sector has performed well in recent years. What explains this interest on the part of investors?
Jonathan Curtis : We believe the tech sector appeals to investors with its secular growth potential driven by digital transformation. Although we are still in the early stages, we believe that digital transformation represents a multi-trillion dollar opportunity and offers the prospect of long, sustained and significant growth. From our perspective, it is transforming the way industries operate by helping companies use software and data to better understand their customers and business processes, and technology to radically change the way their industries operate. activity. The pandemic has forced companies to develop new digital skills and adapt to a complex environment. With digital transformation proven to drive productivity and deepen customer relationships, we believe companies are currently operationalizing and scaling up the approaches that worked during the Covid crisis, and extend their digital transformation initiatives to other parts of their business.
BFM Business: When did you create the Franklin Technology Fund? What are its characteristics ?
Jonathan Curtis : The Franklin Technology Fund was established in April 2000. The Fund is built around the vast opportunities we see in digital transformation and the sub-themes that support it, namely 1) artificial intelligence, machine learning and Automated Analytics, 2) New Commerce, 3) Digital Media Transformation, 4) Secure Cloud and SaaS (Software as a Service), 5) Internet of Things and 5G, 6) Fintech and digital payments, 7) cybersecurity, 8) the future of work, 9) digital customer engagement and 10) electrification and autonomy. We seek to identify our best investment ideas by adopting an approach that combines bottom-up and top-down research. We start by analyzing a specific industry in depth, identify attractive companies, and then focus research on them applying our bottom-up analysis to identify those we want to own over a multi-year horizon. This analysis is performed by our equity research team, located in our Silicon Valley headquarters.
BFM Business: What are your expectations in terms of growth in the technology sector over the next few years?
Jonathan Curtis : We see significant opportunities across multiple subtopics, such as artificial intelligence, machine learning and analytics, but also new commerce and digital customer engagement, not to mention cybersecurity, electrification and autonomous technology applied to automotive and robotics, artificial intelligence and analytics capabilities, to name a few. While all of these opportunities are exciting, we believe the secure cloud and SaaS sub-theme is the most promising, as it underpins all other digitalization trends. We believe that the other subtopics are not possible without the cloud. We are also very positive about the digital transformation of the media and the rise of the metaverse (a fully accomplished digital world). In our view, the metaverse opportunity can represent the ultimate outcome of “digital transformation”.