Could deliver growth in a subdued macro-environment: Franklin Global Trust

FRGT’s high quality investee companies could deliver growth in a subdued macro-environment…by Jean-Baptiste Andrieux

Overview

 
Franklin Global Trust (FRGT) is the new name of Martin Currie Global Portfolio (MNP) following the trust’s integration into Franklin Equity Group (FEG), with the strategy remaining unchanged: investing unconstrained in attractively valued, high-quality companies with strong fundamentals and a sustainable growth trajectory. However, manager Zehrid Osmani and his team of ten analysts now benefit from the support of more than 60 professionals, while Jonathan Curtis, chief investment officer of FEG, is set to join as co-portfolio manager in July 2025 to help facilitate FRGT’s integration into the group. That said, we understand Zehrid will remain responsible for stock selection.

During the trust’s past financial year (ended 31/01/2025), Zehrid and his team strengthened their exposure to companies well positioned to monetise artificial intelligence (AI), believing these businesses will be the beneficiaries of the next phase of AI development. As a result, Meta and Apple were introduced into the Portfolio. Zehrid and his team also added consumer names benefitting from brand momentum, including Chipotle Mexican Grill and Deckers Outdoor, replacing consumer stocks in the portfolio where the team’s conviction had decreased. High conviction in the stock selection is a cornerstone of the strategy, with only the team’s best ideas getting a place in the portfolio, which consists of 31 stocks as of 30/04/2025.

In late November 2024, the board fully repaid the trust’s debt facility and removed Gearing due to higher borrowing costs, an uncertain market outlook, and to help the trust’s zero-discount policy (ZDP). Indeed, the board takes a proactive approach to share buybacks and issuance in order to keep the trust’s share price as close to NAV as possible. Over the past 12 months (to 02/06/2025), FRGT has continued to trade at a very narrow Discount, standing at c. 2.2% at the time of writing.
 

Analyst’s View

 
In our view, the integration of FRGT into FEG provides Zehrid and his team with significantly enhanced research capabilities, which could give them an edge in identifying quality growth companies operating in transformative industries. This includes experts located in key regions such as Silicon Valley – home to many innovative companies – as well as sector specialists. In addition, FEG shares a similar investment philosophy with Zehrid and his team, which we think should support a smooth and effective collaboration.

With trade tensions escalating since the beginning of the year, we believe investors may want to focus on companies with strong fundamentals – such as those targeted by Zehrid and his team. The uncertainty stemming from these trade tensions is weighing on earnings growth expectations, as both corporates and consumers are likely to reduce spending. However, we believe FRGT’s high-quality growth investee companies are the types of businesses that could still deliver growth in a subdued macroeconomic environment. Moreover, we think equity markets could benefit from positive catalysts if trade tensions evolve into trade deals. That said, it’s also important to take a long-term view, where we believe FRGT may have an edge as well given its exposure to themes poised for structural growth.

Finally, we note that FRGT has consistently traded close to par over the past five years (to 19/05/2025), which we believe underscores the effectiveness of the board’s ZDP. In our view, this is an attractive feature of the trust, providing investors with confidence that they should be able to buy and sell shares at prices close to the trust’s NAV.

Bull

• Enhanced resources following the integration into Franklin Equity Group
• Robust fundamentals of FRGT’s investee companies could deliver growth in a subdued macro-environment
• Discount management provides confidence that investors may buy/sell shares at prices close to NAV

Bear

• Could lag the benchmark in value-driven markets or when market returns are particularly narrow
• Concentrated portfolio can enhance stock-specific risks
• No gearing could limit returns in rising markets

See the full research on FRGT here >

Disclaimer

This is a non-independent marketing communication commissioned by Franklin Templeton. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.