Which Sector Has Been Delivering for the Franklin Growth Fund so Far in 2016?

Performance evaluation

The Franklin Growth Fund Class A (FKGRX) has risen 4.7% in YTD 2016. This makes it the second best performer in the year so far, among the 12 funds chosen for this review. In the one-year period until July 15, the fund is placed fourth among its peers.

We have graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF). Let’s look at what has contributed to this superior performance by the fund in YTD 2016.

Which Sector Has Been Delivering for the Franklin Growth Fund so Far in 2016?

Portfolio composition and contribution to returns

The largest invested sector by FKGRX, industrials have contributed the most to the fund’s returns in YTD 2016. Northrop Grumman (NOC) and Union Pacific (UNP) have led positive contributors, which include 3M Co (MMM) and WW Grainger (GWW). Meanwhile, Alaska Air Group (ALK) and Sensata Technologies Holding (ST) have reduced some of the positive contributions from other stocks.

Stock picks from the healthcare sector have also helped the fund post gains in 2016 so far. Johnson & Johnson (JNJ) and Teleflex (TFX) have healed the sector. However, sizable negative contributions from Allergan (AGN) and Biogen (BIIB) have reduced a lot of the positive contribution.

Information technology has matched health care in terms positive contribution in 2016 so far. Computer Sciences (CSC), Intuit (INTU), and Oracle (ORCL) are among the major positive contributors. Meanwhile, Martin Marietta Materials (MLM) has led materials up.

Investor takeaway

FKGRX has underperformed the SPDR S&P 500 ETF (SPY). However, its stock picks from most sectors, except the consumer-focused ones, energy, and utilities have done better than those comprising the same sectors in the SPY. The fund can be of use for those investors who are optimistic about the industrials sector. The fund’s low turnover, reflecting fund managers’ belief in their stock picks, is also an attractive feature. The fund is positioned for the long-term and investors with an appreciable horizon can consider FKGRX in their shortlist of funds.

Now let’s move to the next fund under review: the Harbor Capital Appreciation Fund Investor Class (HCAIX).