Manager focus: Grant Bowers
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Grant Bowers, the manager of the Franklin US Opportunities fund, has bolstered its weightings to technology, healthcare and energy.
Bowers also runs an American mutual fund and a Luxembourg Sicav version of US Opportunities, which together have combined assets of over $1 billion (£601m).
While he says tech, healthcare and energy are already the largest three weightings in the fund, Bowers continues to find new investment opportunities.
Companies in the technology sector often have healthy balance sheets with high cash positions. He says they are selling into the global market and consequently are benefiting from a weaker dollar.
Another big driver behind international sales is rising demand in emerging markets. Bowers says countries are aware that if, for example, they do not have a good broadband connection, their growth will slow.
At the stock level, Apple, Flir Systems and Mastercard are the fund’s three largest holdings.
Apple, which at 3.25% is the largest position of the portfolio, has been part of the fund for eight years. “It is no longer only Apple computers,” he says. “It has become a global brand and is able to charge a premium.”
The second largest position, Mastercard, is also in many ways an iconic brand. Bowers says the company is not only an industry leader but is also well positioned to grow over the long-term. Bowers says consumers all over the world, and increasingly in emerging markets, are shifting from cash-based to credit- and debit-based transactions.
“We find great growth stocks in life science, medical devices and biotechnology”
Grant Bowers
Another sector Bowers is taking an active bet on is healthcare. “It’s very interesting and we find more investment opportunities there than in any other sector,” he says. Healthcare stocks, he adds, have priced in a lot of uncertainty over America’s healthcare reforms. “We find great growth stocks in life science, medical devices and biotechnology,” he says.
However, Bowers says his funds do not own the large pharmaceutical companies as they tend to have only moderate and slow growth. “Large pharma companies pay dividends but we look to invest in growth companies,” he says.
The third big overweight is the energy sector. Bowers says a lot of companies, especially those in the energy services sector, continue to benefit from the rising oil price.
His biggest underweights are in consumer staples, materials, and utilities. Although there are high quality companies in those sectors, they are usually large and slow growing companies, he says.
The fund typically holds between 60 and 80 companies. While the turnover rate of the portfolio is around 80% per year, Bowers hardly ever changes his top 10 holdings.
Some 47% is invested in large-caps, 44% in mid-caps and 9% in small companies.
Bower says in the past couple of months it was mainly low quality, high beta stocks that rallied. Yet he expects high quality and high growth stocks to follow next year.
“Year-to-date, it has been a narrow recovery but it will become much broader,” he says. “At the moment [investors pay] a premium for high quality companies. These companies will outperform as the economy recovers.”
