Templeton China Fund A (acc) USD

Transcription

1 Franklin Templeton Investment Funds Value Equity Fund Manager Report Product Details 1 Fund Assets $581,186, Fund Inception Date 01/09/1994 Number of Issuers 52 Bloomberg ISIN Base Currency Investment Style Benchmark Morningstar Category TEMCHAI LX LU USD Value MSCI Golden Dragon Index Greater China Equity Asset Allocation 2 % Equity Cash & Cash 1.99 Equivalents Fixed Income 0.00 Fund Description The Fund aims to achieve long-term capital appreciation by investing primarily in equity securities of companies organised under the laws of or having their principal offices in China, Hong Kong or Taiwan, as well as in companies which derive the principal portion of their revenues from goods or services sold or produced, or have the principal portion of their assets in China, Hong Kong or Taiwan. Key Points The moved higher in January, outperforming broader emergingmarket equities. China, Taiwan and Hong Kong all posted gains for the period. The fund gained in January. All sectors contributed to absolute performance for the month, led by information technology, financials and consumer discretionary. Only a few individual stocks weighed on absolute returns, most notably Shanghai Pharmaceuticals and Nine Dragons Paper. Performance Data Performance Net of Management Fees as at 31/01/2018 (Dividends Reinvested) (%) 3 1 Mth 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception (01/09/1994) A (acc) USD MSCI Golden Dragon Index Calendar Year Returns (%) 200% 100% 0% -100% A (acc) USD Past performance is not an indicator or a guarantee of future performance. Portfolio Manager Insight Market Review The had a strong start to 2018, outperforming broader emergingmarket (EM) equities for the month of January. China was the strongest market in the index, as its economy grew faster than expected in the fourth quarter and expanded 6.9% in 2017, marking its first annual acceleration in seven years. Taiwan-based equities reached a 28-year high, driven in part by an improving outlook for semiconductor manufacturers. Hong Kong gained as well, supported by strength in banking stocks and by improving retail sales figures. Performance Review The fund gained in January, lifted by information technology (IT) stocks, especially Tencent, China s largest and most-used internet service portal, e-commerce company Alibaba and Taiwanbased semiconductor manufacturer TSMC. The financials sector gained as well, particularly positions in China Construction Bank and Industrial and Commercial Bank of China. Amongst consumer discretionary holdings, contributors included ANTA Sports Products, a manufacturer of sportswear under the ANTA brand name and of Fila products under license for the Chinese market. A position in auto maker Jiangling Motors also benefitted absolute returns. No sector lost ground for the month, and only a few individual stocks weighed on returns. These included Shanghai Pharmaceuticals, a manufacturer and distributor of pharmaceuticals, and pulp, paper and containerboard manufacturer Nine Dragons Paper. 1. All holdings are subject to change. Holdings of the same issuers have been combined.

2 Portfolio Positioning Portfolio construction takes place on a stock-by-stock fundamental basis, and sector weightings are an outcome of the stock selection process. During January, the fund s largest sector weightings were in IT, financials and consumer discretionary. Our major investment themes are along both structural and cyclical fronts. They include internet technology and e-commerce, luxury consumption, mass consumption, commodity price recovery with supply-side reform, and structural growth. Outlook & Strategy We expect the global economic environment to remain favourable, driven by pro-business policies, increased investment, high liquidity and economic growth. The International Monetary Fund raised its global gross domestic product (GDP) growth forecasts for 2018 and 2019 from 3.7% to 3.9%, in part due to improving growth in the US economy and continued solid expansion in China. Key areas of risk include uncertainty about the US administration s policies, as well as the ability of China to continue its growth while making structural adjustments. US monetary policy shifts also remain a source of apprehension for many market participants. There may be volatility ahead, but we believe companies in China, with strong support from the government, are successfully managing the ongoing structural shift towards neweconomy sectors. Many of these companies have shown a high degree of innovation and sustainable growth. Looking ahead, our core themes of IT and consumerism remain, and we continue to identify opportunities within these areas. We believe that we are still in the early innings of the earnings growth upturn, and that China can offer investors access to innovative, fast-growing companies trading at what we consider attractive valuations. Portfolio Characteristics 4,5 Portfolio Price to Earnings (12 Month Trailing) 17.09x 16.99x Price to Book Value 1.81x 2.01x Price to Cash Flow 8.99x 12.35x Market Capitalisation (Millions in USD) 179, ,859 Dividend Yield 2.13% 2.09% Portfolio Diversification Top Sector Contributors 6 Total Sector Effect (%) Information Technology 0.49 Energy 0.29 Industrials 0.18 Utilities 0.18 Real Estate 0.17 Top Security Contributors 6,7 Security Total Effect (%) SINOPEC 0.32 CHINA CONSTRUCTION BANK 0.28 HON HAI PRECISION INDUSTRY 0.17 CO LTD NETEASE INC 0.16 JIANGLING MOTORS GROUP 0.15 Past performance is not an indicator or a guarantee of future performance. Contributors/detractors data shown is for the period from 01/01/2018 to 31/01/2018. Top Sector Detractors 6 Total Sector Effect (%) Health Care Materials Consumer Staples Top Security Detractors 6,7 Security Total Effect (%) NINE DRAGONS PAPER HOLDINGS LTD. SHANGHAI PHARMACEUTICALS HOLDING CO LTD ANTA SPORTS PRODUCTS LTD HONG KONG EXCHANGES & CLEARING LTD BANK OF CHINA LTD

3 Geographic Weightings vs. 2 China Hong Kong Taiwan Cash & Cash Equivalents % 25% 50% 75% 100% Sector Weightings vs. 2 Information Technology Financials Consumer Discretionary Consumer Staples Energy Materials Industrials Health Care Telecommunication Services Utilities Real Estate Cash & Cash Equivalents % 5% 10% 15% 20% 25% 30% 35% 40% 45% Templeton China Fund Templeton China Fund Top Ten Holdings 8 Top Holdings Sector Country % TENCENT HOLDINGS LTD Software & Services China TAIWAN SEMICONDUCTOR Semiconductors & Semiconductor Taiwan 9.41 MANUFACTURING CO LTD Equipment ALIBABA GROUP HOLDING LTD Software & Services China 7.81 ANTA SPORTS PRODUCTS LTD Consumer Durables & Apparel China 5.52 CHINA PETROLEUM & CHEMICAL Energy China 5.38 CORP TEMPLETON CHINA A SHARES Diversified Financials Hong Kong 5.18 FUND CHINA CONSTRUCTION BANK Banks China 5.06 CORP INDUSTRIAL AND COMMERCIAL Banks China 3.73 BANK OF CHINA LTD AIA GROUP LTD Insurance Hong Kong 3.44 UNI-PRESIDENT CHINA HOLDINGS LTD Food Beverage & Tobacco China 3.33 Supplemental Performance Statistics 3 Yrs 5 Yrs 10 Yrs Since Inception Standard Deviation (%) Templeton China Fund Tracking Error (%) Information Ratio Beta Sharpe Ratio Templeton China Fund Beta, Information Ratio and Tracking Error information are measured against the. 3

4 Investment Team Portfolio Manager Years with Firm Years Experience Eddie Chow, CFA, Senior Executive Vice President, Director of China Strategies What Are the Key Risks? The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. The Fund invests mainly in Chinese equity securities. Such securities have historically been subject to significant price movements, frequently to a greater extent than equity markets globally. As a result, the performance of the Fund can fluctuate significantly over relatively short time periods. Other significant risks include: currency risk, emerging markets risk, liquidity risk, Shanghai-Hong Kong Stock Connect risk. For full details of all of the risks applicable to this Fund, please refer to the Risk Considerations section of the Fund in the current prospectus of Franklin Templeton Investment Funds. 4

5 Important Legal Information This document is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of any of the Luxembourg-domiciled SICAV Franklin Templeton Investment Funds (the Fund ). Given the rapidly changing market environment, Franklin Templeton Investments disclaims responsibility for updating this material. Subscriptions to shares of the Fund can only be made on the basis of the current prospectus of the Fund, accompanied by the latest available audited annual report and the latest semi-annual report if published thereafter. An investment in the Fund entails risks which are described in the Fund s prospectus. If the fund invests in a specific sector or geographical area, the returns may be more volatile than a more diversified fund. A copy of the latest prospectus, the annual report and semi-annual report, if published thereafter can be found on our website: or can be obtained, free of charge, from the address below. Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority. Dubai office: Franklin Templeton Investments, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box , Dubai, U.A.E., Tel.: Fax: Past performance is not an indicator or a guarantee of future performance. The value of shares in the Fund and income received from it can go down as well as up, and investors may not get back the full amount invested. Investment in the Fund entails risks which are described in the Fund s prospectus and, where available, in the relevant Key Investor Information Document. Special risks may be associated with a Fund s investment in certain types of securities, asset classes, sectors, markets, currencies or countries and in the Fund s possible use of derivatives. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund s holdings at any one time. Currency fluctuations may affect the value of overseas investments. When investing in a fund denominated in a foreign currency, your performance may also be affected by currency fluctuations. Where a Fund invests in emerging markets, this investment can be more risky than an investment in developed markets. No shares of the Fund may be directly or indirectly offered or sold to residents of the United States of America. Shares of the Fund are not available for distribution in all jurisdictions and prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest. The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this material and may change without notice. A portfolio manager s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund s portfolio selection process. Holdings are subject to change. In addition, it should not be assumed that any securities mentioned were or will prove to be profitable. Stocks mentioned in this report are not a solicitation to purchase those stocks, and are examples of some stocks which performed well. Not all stocks in the portfolio performed as well. For the most current information on the fund, please contact your Franklin Templeton marketing representative. Performance figures are not based on audited financial statements and assume reinvestment of interest and dividends. When comparing the performance of Franklin Templeton Investment Funds (the Fund ) with a benchmark index, it is important to note that the securities in which Franklin Templeton Investment Funds invests may be substantially different than those represented by the benchmark index. Furthermore, an investment in Franklin Templeton Investment Funds represents an investment in a managed investment company in which certain charges and expenses, including management fees, are applicable. These charges and expenses are not applicable to indices. Lastly, please note that indices are unmanaged and are not available for direct investment. Certain data and other information shown have been supplied by outside sources. While we consider that information to be reliable, we give no assurance that such data and information is accurate or complete. References to indexes are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. The indices include a greater number of securities than those held in the Fund. An index is unmanaged and one cannot invest directly in an index. The performance of the index does not include the deduction of expenses and does not represent the performance of any Franklin Templeton fund. Past performance is not an indicator or a guarantee of future performance. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at 2. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change. 3. Source for all information is Franklin Templeton Investments. Benchmark related data provided by FactSet. Past performance is not an indicator or a guarantee of future performance. Periods greater than one year are shown as average annual total returns. Fund performance data include reinvested dividends, and is net of management fees. Sales charges, other commissions, taxes and other relevant costs to be paid by the investor are not included. The fund offers other share classes subject to different fees and expenses, which will affect their performance. Please see the prospectus for details. 4. The portfolio characteristics listed are based on the fund s underlying holdings, and do not necessarily reflect the fund s characteristics. Due to data limitations all equity holdings are assumed to be the primary equity issue (usually the ordinary or common shares) of each security s issuing company. This methodology may cause small differences between the portfolio s reported characteristics and the portfolio s actual characteristics. In practice, Franklin Templeton s portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The market capitalisation figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. Source: Factset. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. 5. The dividend yield quoted here is the yield on securities within the portfolio and should not be used as an indication of the income received from this portfolio. 6. Past performance is not an indicator or a guarantee of future performance. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. Source: FactSet. Important data provider notices and terms available at Total Effect represents the excess return by sector as compared to Franklin Templeton Investments The Gate, East Wing, Level 2 Dubai International Financial Centre P.O. Box Dubai, U.A.E. Tel.: Fax.: Franklin Templeton Investments. All rights reserved.

6 the index. Performance attribution is calculated in the base currency of the fund. 7. Top Security Contributors and Top Security Detractors are holdings based on the last one month period for rolling months or on the last three months period for quarter end months. These securities do not represent all the securities purchased, sold or recommended for advisory clients, and the reader should not assume that investment in the security listed was or will be profitable. Holdings are subject to change, holdings of the same issuer have been combined. The information provided is not a recommendation to purchase, sell or hold any particular security. The security identified does not represent the Fund s entire holdings and in the aggregate, may represent a small percentage of such holdings. There is no assurance that security purchased will remain in the Fund, or that security sold will not be repurchased. 8. Holdings of the same issuers have been combined. Top ten holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the fund s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the fund, or that securities sold will not be repurchased. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwise be included. 10. Information Ratio is a way to evaluate a manager s ability to outperform a benchmark in relation to the risk that manager is assuming, with risk defined as deviation from the benchmark. This measure is calculated by dividing the portfolio s excess return (portfolio return less the benchmark return) by the tracking error (derived by taking the standard deviation of the monthly differences between the portfolio return and the benchmark return over time). Franklin Templeton Investments The Gate, East Wing, Level 2 Dubai International Financial Centre P.O. Box Dubai, U.A.E. Tel.: Fax.: Franklin Templeton Investments. All rights reserved.