uploads///Portfolio Breakdown of the FKGRX

How the Franklin Growth Fund Allocated Its Portfolio in 2015

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Franklin Growth Fund

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:

  • potential to produce sustainable earnings and cash flow growth
  • strong management teams and financial strength
  • attractive valuation

The fund can invest up to 40% of its assets in smaller companies. The fund’s assets were invested across 156 equity holdings as of December 2015, and the fund was managing assets worth $11.8 billion as of the end of December. As of November, its top ten equity holdings included Apple (AAPL), Alaska Air Group (ALK), Northrop Grumman (NOC), Boeing (BA), and Microsoft (MSFT), comprising a combined 10.2% of the fund’s portfolio.

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Historical portfolios

For this analysis, we will be considering holdings as of September 2015, as that is the latest available sectoral breakdown. The holdings after September reflect the valuation-driven changes to the portfolio, not the actual holding. The fund releases portfolio details once a quarter and has yet to come out with the complete portfolio for 4Q15.

Unlike a lot of its peers in this review, FKGRX’s highest exposure is in the industrials sector. Information technology and healthcare, respectively, are the second and the third largest sectors. These three sectors form ~74% of the fund’s portfolio. Consumer discretionary is the only other sector that forms over 10% of the fund’s assets. The fund is not invested in the telecom services sector.

From the previous reporting period, fund managers have increased exposure to industrials. However, from a year ago, exposure has almost remained the same. One thing worthy of mention is the fact that the fund has very low turnover. It sticks to its strategy of holding stocks for a long time. Over the course of 2015, the fund has mostly initiated fresh positions while liquidating few. Holdings in financials and utilities sectors have remained unchanged over this period.

In the next article, we’ll see how the fund fared in 2015.

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