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Franklin templeton international presentation (2)
 

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    Franklin templeton international presentation (2) Franklin templeton international presentation (2) Presentation Transcript

    • From Small Acorns… The Case for UK Smaller Companies Paul Spencer Co-Manager, Franklin UK Smaller Companies FundFor Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 1The Numis Smaller Companies Index?• Formerly the Hoare Govett Smaller Companies Index• Bottom 10% of the Main UK Listed Market by Value (rebalanced annually)• 80% FTSE 250, 15% FTSE Small Cap and 5% Others• c.400 Companies (excluding investment trusts)• £1.3bn Largest Market Cap (as at 30 September cut-off point)Source: Franklin Templeton Investments as at 30/09/12.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 2Numis Smaller Companies IndexSector BreakdownSector Index (%)Basic Materials 7.54%Consumer Goods 7.98%Consumer Services 20.95%Financials 16.16%Healthcare 3.56%Industrials 26.68%Oil & Gas 6.57%Technology 7.00%Telecommunications 3.03%Utilities 0.52%Source: Franklin Templeton Investments as at 30/09/12.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTSSmall Cap Out-Performance Over the Last 10 Years 400 350 Performance in GBP (rebased to 100) 300 250 200 150 100 50 0 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 NCSX EXCl. Investment Trusts TR Index FTSE 100Source: Morningstar Direct®. © 2012 Morningstar UK. All rights reserved as at 30/09/12, total return in GBP over 10 years.For Professional Investor Use Only. Not for Distribution to Retail Investors.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 4Why Allocate to UK Smaller Companies? • Large investment universe • Diverse industry exposure • High growth companies • Strong balance sheets • Rating anomaliesFor Professional Investor Use Only. Not for Distribution to Retail Investors.
    • Franklin UK Smaller Companies Fund A New BeginningFor Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 6Restructuring Strategy • Paul Spencer & Richard Bullas appointed co-managers on 25 June 2012 • Initiated an Immediate Portfolio Review • Refocus the portfolio • Appropriate balance of risk/reward • Invest in long term quality UK small caps • Selling • Mining, oil & gas stocks (high risk) • <1% weightings (low conviction) • <£50m market cap (illiquid, unprofitable) • Equates to 35% AUM and 28 stocks • Buying • Adding to positions in stocks we know & like • Investing in new companies with appropriate profilesFor Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 7Restructuring Strategy – Stocks Bought Sector Stocks Bought House Goods & Cons. Bovis # Travel & Leisure Restaurant Group Support Services RPS Group # Howden Joinery # Mears Group RWS Group Softw. & Comp. Serv. Anite Iomart SDL General Retail Ted Baker Financial Services Polar Capital Media Euromoney Entertainment One Aerospace & Defence Senior Avon Rubber Chemicals Yule Catto # Real Estate Unite Group # # Stock also held in the Franklin UK Mid Cap FundSource: Franklin Templeton Investments as at 30/09/12. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 8Restructuring progress so far… 25 June 30 Sept NSC Index 2012 2012 Weight FTSE 250 23.3% 48.1% 80.8% FTSE SmallCap 14.9% 15.5% 14.4% FTSE Fledgling 3.34% 0% 1.2% AIM 42.1% 25.9% - Unclassified 9.0% 5.4% 3.5% Oil & Gas 6.1% 2.5% 6.2% Basic Materials 17.5% 8.3% 7.1% Stocks to sell 28 1 AUM to sell 35% 0.7% No. of stocks 59 40Source: Franklin Templeton Investments as at 30/09/12. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 9Proof of ConceptThe Franklin UK Mid Cap Fund has been managed usinga similar strategy since February 2006 Fund Performance as at 30 September 2012 1 Year 3 Years 5 Years 10 Years Franklin UK Mid Cap Fund A(inc) 30.03% 54.91% 58.14% 373.72% FTSE 250 Ex Investment Trusts Index 25.50% 41.97% 26.93% 278.66% IMA UK All Companies Sector 17.90% 25.59% 6.65% 120.61% Quartile 1 1 1 1Source: Franklin Templeton Investments and Morningstar as at 30/09/12. © 2012 Morningstar, Inc. All rights reserved. Performance details provided are in GBP, include thereinvested dividends net of basic rate UK tax and are net of management fees. The Franklin UK Mid Cap Fund launched on 17/10/11 to receive the assets of Rensburg UK MidCap Growth Trust, a unit trust. Fund performance data is based on the mid price of the Rensburg UK Mid Cap Growth Trust from its launch on 12/07/1999 to 30/09/2011 and thenet asset value of the Franklin UK Mid Cap Fund A(inc) shares thereafter. Past performance is no guarantee of future performance.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 10Current Opportunities Include Companies With… • Attractive end markets • Stable performance • Reliable growth • Robust balance sheet • Highly regarded managementFor Professional Investor Use Only. Not for Distribution to Retail Investors.
    • AppendixFor Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 12Franklin UK Smaller Companies Fund Fund Details Management Paul Spencer, Richard Bullas Asset Category UK Equity Investment Style Blend IMA sector IMA UK Smaller Companies Benchmark Numis Smaller Companies Ex. Investment Trusts TR Index Launch Date 17/10/2011 Number of Positions 40 Portfolio Size £17.78 millionSource: Franklin Templeton Investments, as at 30/09/12. The Franklin UK Smaller Companies Fund launched on 17 October 2011 to receive the assets of Rensburg UK Smaller CompaniesTrust, a unit trust. All fund performance data is based on the mid price of the Rensburg UK Smaller Companies Trust from its launch on 01/07/1991 to 17/10/2011 and the net asset value ofthe Franklin UK Smaller Companies Fund A(inc) shares thereafter. Past performance does not guarantee future results.Holdings of the same issuer have been combined.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 13Investment Strategy • To create a high conviction portfolio of undervalued companies by primarily investing in the constituents of the Numis Smaller Companies Index (NSCI)*. • To have a portfolio of around 40/45 investments over the longer term. • Minimum size investment c.1.5% and a maximum position of c.5% of the funds AUM • Concentrate on investments with a market cap of between £100m & £1bn.*Excluding investment trusts.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 14Portfolio PositioningAs at 30 September 2012Top Ten Sector Top Ten Holdings Fund Fund Sector Relative to NSCI Stock Weighting Overweight Software & Comp. Services 16.19% +11.44% NCC Group PLC 3.8% Financial Services 9.37% +2.42% Polar Capital Holdings PLC 3.6% Technology Hardware 8.79% +6.55% Lavendon PLC 3.3% Chemicals 8.67% +5.79% Scapa Group PLC 3.2% Elect. & Electrical Equip. 4.96% +1.91% Paragon Group Cos. PLC 3.1% Aerospace & Defence 4.88% +2.37% Laird PLC 3.0% Industrial Engineering 4.51% +2.79% Anite PLC 3.0% Real Estate 4.45% +0.91% IQE PLC 3.0% Pharma. & Biotechnology 4.42% +1.50% Restaurant Group PLC 3.0% Personal Goods 2.68% +2.13% RPS PLC 2.9%Source: Franklin Templeton Investments as at 30/09/12. Weightings as percent of total. Percentage may not equal 100% due to rounding. Information is historical and may not reflect currentor future portfolio characteristics. All portfolio holdings are subject to change.The Ten Largest Holdings represent the ten largest holdings of the fund as of the date indicated. These securities do not represent all of the securities purchased, sold or recommended foradvisory clients, and the reader should not assume that investment in the securities listed was or will be profitable. All portfolio holdings are subject to change. Holdings of the same issuerhave been combined. Weightings as a percentage of total. The portfolio manager for the fund reserves the right to withhold release of information with respect to holdings that would otherwisebe included in a top ten holdings list.For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 15Fund Manager Biography Paul Spencer Vice President, Fund Manager Franklin Templeton Fund Management Limited Location: Leeds, UK Mr Spencer is Lead Manager of the Franklin UK Mid Cap Fund, co-manager of the Franklin UK Smaller Companies Fund and co-manager of the Franklin UK Managers’ Focus Fund. A member of the Franklin UK Equity Team, he specialises in UK mid-cap equity analysis and investment. Paul joined Franklin Templeton Investments when it acquired Rensburg Fund Management in January 2011. Paul started his investment career in 1987, when he joined BWD Rensburg. Within the next eight years, Paul progressed through the ranks becoming Head of Research. In 1991, he assumed responsibility for the BWD UK Smaller Companies Trust leaving in 1995 to join Granville Davies Limited as a Director and Small and Mid Cap analyst. In 1999, Paul joined TD Waterhouse where he was Head of Research, specialising in small and mid- cap investment analysis. He returned to Rensburg in 2006 to manage the Rensburg UK Mid Cap Growth Trust, now called the Franklin UK Mid Cap Fund. During his tenure as Fund Manager of this Fund, he has received a number of awards for investment excellence including the Moneywise Best UK All Companies Fund in 2008, 2009, 2010, an award from Money Observer for the Best UK Small/Mid Cap Fund 2009 and Best UK All Companies Fund over three years from Lipper in 2009. Paul holds a BA (Hons) Economics from Nottingham University. He is a Fellow of the Securities Institute (FSI).For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 16Fund Manager Biography Richard Bullas Research Analyst, Fund Manager Franklin Templeton Fund Management Limited Location: Leeds, UK Richard Bullas, Research Analyst and Fund Manager is co-manager of the Franklin UK Smaller Companies Fund. He is also a co-manager of the Franklin UK Managers’ Focus Fund and assists on a number of other UK equity funds. Richard joined Franklin Templeton Investments when it acquired Rensburg Fund Management in January 2011, having previously worked at Rensburg Fund Management for over 11 years (joining Rensburg in January 2000). Prior to joining Rensburg, Richard worked at AVIVA as a Market Analyst in the life and pensions team. Richard holds a B.Sc (Hons) degree in business and management studies from Bradford University School of Management. He holds the IMC (Investment Management Certificate) and is a Chartered MCSI (Chartered Institute for Securities and Investment)For Professional Investor Use Only. Not for Distribution to Retail Investors.
    • FRANKLIN TEMPLETON INVESTMENTS 17Important InformationFor professional investor use only, this document is not aimed at, nor intended for use by retail investors.Copyright © 2012 Franklin Templeton Investments. All rights reserved.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 the UK-domiciled OEIC,Franklin Templeton Funds (“the Fund”). Nothing in this document should be construed as investment advice.Subscriptions to shares of the Fund can only be made on the basis of the current prospectus, the relevant Key Investor Information Document, accompanied by the latest availableaudited annual report and the latest semi-annual report if published thereafter, which can be found on our website or requested from the address below.An investment in the Fund entails risks which are described in the Fund’s prospectus and the relevant Key Investor Information Document.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. Currency fluctuations may affect thevalue of overseas investment. An investment in the Fund entails risks which are described in the Fund’s prospectus and in the relevant Key Investor Information Document. The Fundinvests in a specific sector or geographical area and the returns may be more volatile than a more diversified fund.No shares of the Fund may be directly or indirectly offered or sold to nationals or residents of the United States of America. Shares of the Fund are not available for distribution in alljurisdictions and prospective investors should confirm availability with their local Franklin Templeton Investments representative before making any plans to invest.Opinions expressed are the authors at publication date and they are subject to change without prior notice. Performance details provided are in GBP, include the reinvested dividendsnet of basic rate UK tax and are net of management fees. The Franklin UK Mid Cap Fund launched on 17/10/11 to receive the assets of Rensburg UK Mid Cap Growth Trust, a unit trust.Fund performance data is based on the mid price of the Rensburg UK Mid Cap Growth Trust from its launch on 12/07/1999 to 30/09/2011 and the net asset value of the Franklin UK MidCap Fund A(inc) shares thereafter. Sales charges and other commissions, other taxes and relevant costs to be paid by an investor are not included in the calculations. Pastperformance is no guarantee of future performance.© 2012 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; an (3) is not warranted to beaccurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.References to indices are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. An index isunmanaged 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 anyFranklin Templeton Group fund.For a free copy of the latest prospectus, the relevant Key Investor Information Document, the annual report and semi-annual report, if published thereafter or for more information aboutany Franklin Templeton Investments’ fund, please contact: Franklin Templeton Investments, Telephone: 0800 305 306, Email: enquiries@franklintempleton.co.uk or write to us at theaddress below.Issued by Franklin Templeton Investment Management Limited (FTIML) Registered office: The Adelphi, 1-11 John Adam Street, London WC2N 6HT. FTIML is authorised and regulatedby the Financial Services Authority.For Professional Investor Use Only. Not for Distribution to Retail Investors.