Franklin Templeton’s Asian Smaller Companies Fund I (acc) USD emerged as one of the winners of the Best Fund Awards 2024 by The Edge Singapore in the global Asia ex-Japan equity category based on data from Morningstar.
Conceived in 2008, the fund pursues an actively managed investment strategy and invests mainly in equity securities issued by smaller companies located in, or doing significant business in, Asia ex-Japan.
As of Feb 29, the fund provided one-year returns of 12.8% and three-year returns of 5.68%. Its top three biggest sectors are in information technology (23.99%), consumer discretionary (23.88%) and financials (21.37%), and its top three geographies are India (40.01%), Taiwan (19.28%) and South Korea (10.76%).
The fund’s top five holdings are Bajaj Holdings & Investments (7.14%), Novatek Microelectronics Corp (4.71%), International Container Terminal Services Inc. (4.28%), FPT Corp (3.94%) and Federal Bank (3.94%).
“Our guiding principle is investing in companies with sustainable long-term earnings power trading at a discount to our estimate of intrinsic value,” says Vikas Chiranewal, senior executive director and portfolio manager of Franklin Templeton.
See also: Towards a flourishing fund management industry
Franklin Templeton’s senior executive director and portfolio manager from its emerging markets equity team, Vikas Chiranewal, says that the firm’s investment philosophy is distinguished by its stewardship of client assets centered around active ownership and their on-the-ground presence.
He further explains that this is complemented by the firm’s country and sector-agnostic approach, which emphasises company selection. “Our guiding principle is investing in companies with sustainable long-term earnings power trading at a discount to our estimate of intrinsic value,” he adds.
Following the downturn in companies related to e-commerce and the emerging digital economy in 2022, Franklin Templeton identified “numerous investment opportunities” in India with solid business models and positive long-term earnings outlook trading at a discount to their intrinsic worth.
See also: PIMCO emerges as top winner with four winning funds across fixed income securities
“Many of these companies benefited from a re-rating in 2023, contributing to fund performance, including Zomato, MakeMyTrip and PB Fintech,” says Chiranewal.
In light of the global economic outlook for 2024, Chiranewal says that the firm acknowledges that it needs to be more “macro aware” given the numerous elections and potential turning points in the interest rate cycle.
“The Franklin Templeton Asia smaller companies have a long-term track record of consistent outperformance,” he says. “Our country and sector-agnostic approach focusing on company selection will remain.”
