The Birth of Global Tech Continues

by Stephen H. Dover, CFA, Franklin Templeton Investments

From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.

Some argue the computer was invented when Englishman Charles Babbage conceived the first programmable, general-purpose computer, while others reason Englishwoman Ada Lovelace, who wrote the first computer programme, is the computer’s true creator. Many debate technological births, yet likely agree that computers and technology continue to transform our daily lives. From today’s cloud computing to self-driving cars, technology continues to be one of the world’s hottest sectors.

• President Joe Biden’s administration’s US$2 trillion infrastructure plan includes accelerated technology investment​s. Tech could benefit from increased purchases of servers, storage, networking hardware and software, and investments in data-centre colocations.
• Broadband and fifth-generation technology (5G) investments​ may get a boost from lower-cost broadband dissemination in ‘broadband deserts’ (rural and urban environments). There could be an expansion of the US Rural Digital Opportunity Fund.¹
• Internet privacy and data legislation, similar to Europe’s 2018 General Data Protection Regulation (GDPR), is likely.
• Technology and innovation are reshaping old-line industries. Industrial, materials, and energy firms are increasingly adopting software and automation solutions to better manage their businesses. Materials companies use scientific data and analytic tools to help address global needs in health and nutrition, and sustainability.
• The global pandemic accelerated technology and innovation trends that we expect to persist. Many non-US companies have continued to help drive this innovation through services, software, and advanced semiconductors.
• While they may not be dominant from a market-capitalisation perspective, a significant number of investable, smaller, and high-quality international technology companies are just as innovative and fast-growing as the US companies garnering much attention in recent years.

Active investing in technology and innovation is a global story, as Franklin Equity Group Portfolio Managers Donald Huber and John Remmert discuss in There’s Much More to Tech Investing than the US Market. We believe government support and spending in next-generation technologies (5G, artificial intelligence, etc.) amongst other major secular trends could be a longer-term positive.

*****

What Are the Risks?

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. The technology industry can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants as well as general economic conditions. Smaller and newer companies can be particularly sensitive to changing economic conditions. Their growth prospects are less certain than those of larger, more established companies, and they can be volatile. Past performance does not guarantee future results.

Important Legal Information

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. Asset types mentioned herein are used solely for illustrative purposes, and any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The opinions are intended solely to provide insight into how securities are analysed. The information provided is not an indication of the trading intent of any Franklin Templeton managed portfolio. These opinions may not be relied upon as investment advice or as an offer for any particular security.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as of publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton Institutional contact for further information on availability of products and services in your jurisdiction.

Issued in the U.S. by Franklin Templeton Distributors, Inc., One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com—Franklin Templeton Distributors, Inc. is the principal distributor of Franklin Templeton’s’ U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

_______________________

1. The Rural Digital Opportunity Fund resources the deployment of high-speed fixed broadband service to rural homes and small businesses that lack it.

This post was first published at the official blog of Franklin Templeton Investments.