Franklin Growth Fund Q2 2024 Commentary

seekingalpha08-21

Major US indexes reached record highs in Q2 2024, with S&P 500 and NASDAQ posting gains fueled by AI fervor.Fund underperformed benchmark due to Apple, but outperformed in June with ServiceNow ...

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In the information technology  sector, our underweight position in Apple  hindered relative performance. The technology giant reported solid fiscal second-quarter 2024 financial results helped by particularly strong growth in its services business. Investor expectations have risen in anticipation of the company’s artificial intelligence  initiatives. In contrast, Monolithic Power Systems  was a top IT sector contributor. The power controller specialist leads in power chip design, with a strong focus on data center applications. AI server growth has been a driver of performance for the company. Sartorius  was a top detractor in the health care sector. The international pharmaceutical and laboratory equipment supplier issued disappointing first-quarter 2024 financial results, which have been impacted by weakness in China and lower investment in higher-priced equipment.     Stocks Sec","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","FELE":"富兰克林电子","IVV":"标普500指数ETF","SH":"标普500反向ETF","LU1323610961.USD":"UBS (LUX) EQUITY SICAV - LONG TERM THEMES (USD) \"P\" (USD) ACC","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC","LU1989764664.SGD":"CPR Invest - Global Disruptive Opportunities A2 Acc SGD-H","IE0005OL40V9.USD":"JANUS HENDERSON BALANCED \"A6M\" (USD) INC","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0426417589.USD":"NINETY ONE GSF GLOBAL FRANCHISE \"A\" (USD) INC","INTU":"财捷","IE00BN29S564.USD":"JANUS HENDERSON BALANCED \"A3\" (USD) INC","SG9999001424.SGD":"United E-Commerce Fund SGD","SSO":"两倍做多标普500ETF","LU0994945656.USD":"NINETY ONE GSF GLOBAL FRANCHISE \"A\" (USD) INC 2","VOO":"Vanguard标普500ETF","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","LU0672654240.SGD":"FTIF - Franklin US Opportunities A Acc SGD-H1","SPXU":"三倍做空标普500ETF","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU0823434583.USD":"BNP PARIBAS US GROWTH \"C\" (USD) ACC","MPWR":"Monolithic Power Systems","BK4554":"元宇宙及AR概念","OEF":"标普100指数ETF-iShares","IE0004086264.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"A\" (USD) ACC","LU0823434740.USD":"BNP PARIBAS US GROWTH \"C\" (USD) INC","BK4553":"喜马拉雅资本持仓","SPY":"标普500ETF","LU2286300806.USD":"Allianz Cyber Security AT Acc USD","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","DJIA":"GLOBAL X DOW 30® COVERED CALL ETF","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","SDS":"两倍做空标普500ETF","NKE":"耐克",".SPX":"S&P 500 Index","OEX":"标普100","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","IE00B4YYXB79.USD":"PIMCO BALANCED INCOME AND GROWTH \"E\" (USD) ACC","SARTF":"Sartorius AG","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","AAPL":"苹果","LU0061474960.USD":"天利环球焦点基金AU Acc","NOW":"ServiceNow"},"translate_title":"富兰克林成长基金2024年第二季度评论","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SARTF":1,"DJIA":1,"FELE":1,"NOW":1,"MPWR":1,"INTU":1,"AAPL":0.9,"VOO":0.9,"SPY":0.9,"OEF":0.6,"NKE":0.6,"ESmain":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,".SPX":0.6,"IVV":0.6},"content_text":"Major US indexes reached record highs in Q2 2024, with S&P 500 and NASDAQ posting gains fueled by AI fervor.Fund underperformed benchmark due to Apple, but outperformed in June with ServiceNow contributing.Outlook is optimistic with focus on AI, medical tech, and energy transition; investing in quality businesses for long-term growth.   anyaberkut Performance Review Major US indexes reached new record highs during the second quarter of 2024. While the Dow Jones Industrial Average (DJIA) ended the period with losses, fervor for artificial intelligence ('AI') lifted the Standard & Poor’s 500 Index (SP500, SPX) and NASDAQ Composite Index (COMP:IND) to solid quarterly gains. The US Federal Reserve (Fed) kept the federal funds target rate unchanged at a 23-year high at its May and June meetings, reducing its projected number of rate cuts for 2024 from three to one. Large-capitalization stocks collectively generated gains, while small- and mid-cap stocks generally declined, with growth faring better than value in all three market-cap tiers. Quarterly Key Performance Drivers     Stocks Sectors   HELPED Monolithic Power Systems, Inc. Energy (Lack of Exposure)   Eli Lilly and Company Consumer Discretionary (Stock Selection, Underweight)   Amphenol Corporation Class A Financials (Underweight)   HURT Apple Inc. Industrials (Overweight)   Sartorius AG Pref Information Technology (Stock Selection)   Monster Beverage Corporation Consumer Staples (Stock Selection)  \nClick to enlarge The fund’s returns were positive for the quarter but lagged its S&P 500 Index benchmark. In the information technology ('IT') sector, our underweight position in Apple (AAPL) hindered relative performance. The technology giant reported solid fiscal second-quarter 2024 financial results helped by particularly strong growth in its services business. Investor expectations have risen in anticipation of the company’s artificial intelligence ('AI') initiatives. In contrast, Monolithic Power Systems (MPWR) was a top IT sector contributor. The power controller specialist leads in power chip design, with a strong focus on data center applications. AI server growth has been a driver of performance for the company. Sartorius (OTCPK:SARTF) was a top detractor in the health care sector. The international pharmaceutical and laboratory equipment supplier issued disappointing first-quarter 2024 financial results, which have been impacted by weakness in China and lower investment in higher-priced equipment.     Stocks Sectors   HELPED ServiceNow, Inc. Information Technology (Overweight)   Intuit Inc. Financials (Underweight)   Autodesk, Inc. Energy (Lack of Exposure)   HURT Apple Inc. Industrials (Overweight)   NIKE, Inc. Class B Consumer Discretionary (Stock Selection)   NextEra Energy, Inc. —  \nClick to enlarge The fund outperformed its benchmark in June. In the IT sector, ServiceNow (NOW) contributed most to relative returns. The cloud-computing platform has been leveraging AI into its workflow automation software to improve how a company predicts workflows, saving time and money. Following a brief setback of its stock in May, Intuit (INTU) climbed higher in June as AI continues to help drive revenue growth for the financial management software provider. We believe the long-term secular shift toward doing taxes online and price increases on its popular tax software are tailwinds for the company. In contrast, athletic apparel and footwear company Nike (NKE) was a leading detractor in the consumer discretionary sector. Sluggish sales of its core brands weighed on its fiscal fourth-quarter 2024 financial results, pressuring its stock. We acknowledge the company’s strong brand equity advantage and will be monitoring management’s ability to improve innovation and distribution. Outlook & Strategy During the quarter, there were indications that US inflation was moderating, though it continued to exceed the Fed’s target. Our outlook on the US stock market is broadly optimistic, and we anticipate a slow decline in inflation rates, potentially leading to rate cuts later in the year. We believe Franklin Growth Fund can perform well in different market situations by investing in some appealing secular trends. For instance, we are optimistic about AI, which can help businesses be more productive, cost-effective and efficient. We see promising inventions in medical technology, such as surgical robots and bioprocessing systems. We also see high growth potential in companies that are advancing energy transition and digital transformation. We invest in quality businesses that we believe can expand over long periods of time. These businesses, in our view, can adjust to various economic situations and have an edge over their competitors. We employ active management and a rigorous selection process to identify what we believe to be superior companies that can potentially benefit from the upside of a market cycle while managing downside risk. Currently, our largest sector exposure is in IT, where we favor software and semiconductor companies, especially those driving the future of AI. We are also overweight relative to the benchmark in the health care and industrials sectors, where we are finding opportunities in the life sciences tools and professional services industries, respectively.   Fund Details   Inception Date 03/31/1948   Benchmark S&P 500 Index, Russell 1000 Growth Index  \nClick to enlarge Fund Description The fund seeks long-term capital appreciation by investing substantially in the equity securities of companies that are leaders in their industries, and which the managers believe are suitable for a buy-and-hold strategy. Performance Dataa: Average Annual Total Returns 1(%) at NAV     1 Mth 3 Mths 1 Year 3 Year 5 Year 10 Year Since Inception Inception Date   Advisor Class - With Sales Charges b,c 4.02 3.43 23.94 6.43 13.88 13.13 10.69 03/31/1948   Advisor Class - Without Sales Charges b,c 4.02 3.43 23.94 6.43 13.88 13.13 10.69 03/31/1948   Class A - With Sales Charges b -1.73 -2.32 16.84 4.18 12.31 12.20 10.50 03/31/1948   Class A - Without Sales Charges b 3.99 3.37 23.63 6.16 13.59 12.84 10.58 03/31/1948   S&P 500 Index 3.59 4.28 24.56 10.01 15.04 12.86 - -   Russell 1000 Growth Index 6.74 8.33 33.48 11.28 19.34 16.33 - -   Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the figures shown. Principal value and investment returns will fluctuate, and investors’ shares, when redeemed, may be worth more or less than the original cost. Performance would have been lower if fees had not been waived in various periods. Total returns assume the reinvestment of all distributions and the deduction of all fund expenses. Returns for periods of less than one year are not annualized. All classes of shares may not be available to all investors or through all distribution channels. For current month-end performance, please call Franklin Templeton at (800) DIAL BEN/(800) 342-5236 or visit www.franklintempleton.com. An investor cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges. Share Class Details         Sales Charges     Expenses     CUSIP Ticker Max CDSC Gross Net   Advisor Class 353496839 FCGAX –   – 0.55% 0.55%   Class A 353496508 FKGRX 5.50%   – 0.80% 0.80%  \nClick to enlarge  The S&P 500 Index features 500 leading U.S. publicly traded companies, with a primary emphasis on market capitalization. Source: © S&P Dow Jones Indices LLC. All rights reserved. The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. Source: FTSE. \nClick to enlarge \nClick to enlarge  Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2461857591"}