FKGRX: performance evaluation
The Franklin Growth Fund Class A (FKGRX) has done well enough YTD (year-to-date) in 2016 to place among the top three funds among the group of 12 we’ve selected for review in this series. It’s the third-best performer in the year so far among the 12 funds. In the one-year period until October 14, the fund comes in third place among peers. We have graphed below FKGRX’s 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 so far in 2016.
Contribution to returns
Tech stocks have emerged as the biggest contributors to the fund’s YTD returns in 2016. Apple has (AAPL) led the sector in terms of positive contribution to returns and has had help from Computer Sciences (CSC). The absence of a sizable negative contributor has helped the sector as well.
Industrials—FKGRX’s largest sector—has emerged as a major positive contributor as well, with Union Pacific (UNP) and Northrop Grumman (NOC) giving positive contributions, along with 3M Co (MMM) and Illinois Tool Works. (ITW). Alaska Air Group (ALK) and Sensata Technologies Holding (ST) have reduced some of the positive contributions from other stocks.
Stock picks from the energy and healthcare sectors have contributed nearly equally to the fund’s returns. Mettler-Toledo International (MTD), Intuitive Surgical (ISRG), and Johnson & Johnson (JNJ) have all helped the healthcare sector post gains, while Anadarko Petroleum (APC) has done the same from the energy sector. However, sizable negative contributions from Allergan (AGN) and Illumina (ILMN) have reduced much of the positive contributions from the healthcare sector.
The consumer discretionary sector has emerged as the sole negative contributor. Although Amazon.com (AMZN) has been a major positive contributor, negative contributions from the Walt Disney Company (DIS), Nike (NKE), and BorgWarner (BWA), among others, have driven the sector’s returns into negative territory.
The past three months have not been good for FKGRX. But YTD, the fund has done quite well. The healthcare sector, which has hurt many funds in this review, has actually been a positive contributor to the fund. The only disappointment has been the consumer discretionary sector. Its extremely low turnover and superior performance are testimonies to the fund management’s stock picking ability.
In the next part of this series, we’ll move to the next fund in our review: the Harbor Capital Appreciation Fund Investor Class (HCAIX).