Attribution Analysis of US Mutual Funds through November 2015
Franklin Growth Fund
According to its management, the Franklin Growth Fund – Class A (FKGRX) invests “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.”
Fund managers employ a bottom-up approach and fundamental analysis to shortlist companies that have:
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the potential to produce sustainable earnings and cash-flow growth
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strong management teams and financial strength
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attractive valuation
The fund can invest up to 40% of its assets in smaller companies.
The Franklin Growth Fund’s (FKGRX) assets were invested across 157 equity holdings as of September 2015, and it managed $12.0 billion in assets as of the end of November.
As of November 2015, its top ten equity holdings included Apple (AAPL), Alaska Air Group (ALK), Northrop Grumman Corporation (NOC), The Boeing Company (BA), and Microsoft Corporation (MSFT), comprising a combined 10.4% of the fund’s portfolio.
Historical portfolios
For this analysis, we will be considering FKGRX’s holdings as of September 2015, which is the latest available sectoral breakdown with us. The post-September holdings reflect the valuation-driven changes to the portfolio, not the actual holdings.
Industrials, information technology, and healthcare, in that order, form the core of the fund’s portfolio. Combined, they form over 72% of FKGRX’s portfolio. Consumer discretionary is the only other sector that forms more than 10% of the fund’s assets. The fund is not invested in the telecom services sector.
Exposure to FKGRX’s top three sectors has increased between November 2014–November 2015. This fund has very low turnover, as it sticks to its strategy of holding stocks for a long time. Over this period, the fund has mostly initiated fresh positions while liquidating just a few. Holdings in the financials and utilities sectors have remained unchanged over this period. No fresh stocks purchased, and no existing stocks were sold off completely.
In the next article, we’ll see how the fund has fared in 2015 until November.
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