It's time to invest in the 'internet of things': Fund manager reveals why he believes smart US technology is the place to be
While US investors may be worrying about what effect a Trump presidency would have on their stock market, Franklin Templeton's Grant Bowers is confident he has identified themes that can continue to grow against an uncertain backdrop.
The Franklin US Opportunities fund he manages has its biggest overweight position to information technology, with a 3.7 per cent holding in Amazon, and 3.5 per cent in Facebook.
The manager believes the 'internet of things' - or the increased interaction between devices and humans - is going to be a game-changer, with the likes of driverless cars moving out of science-fiction and onto the roads.
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The fund also looks for companies that will benefit from increased consumer spending, in the belief that lower energy prices will translate to more money in people's pockets to spend on goods.
The US Opportunity fund's retail shares rose by 46.6 per cent in the three years to the end of February, which beat the Investment Association's North America sector average of 39.3 per cent, but was lower than the benchmark Russell 3000 Growth Index return of 53.5 per cent.
Lots of investors opt for a tracker fund when it comes to the US because their market is notoriously efficient - in that it quickly factors and positive or negative events into share prices, meaning it is hard to pick up shares that are cheaper than they should be.
But the Franklin Templeton manager argues that the market volatility we are seeing - and the dispersion between prices it creates - makes this a good environment for an active manager to 'step back from the noise' and add value.
He also makes a case for active research in helping to unearth which companies will be long-term winners.
Markets around the world had a rocky start to the year, with the S&P 500 down 4 per cent to the end of February.
But Bowers says he sees this volatility as an opportunity to invest in companies that the market is mispricing.
In particular, he sees opportunities for growth in the technology sector and also the health sector, which benefits from an ageing population.
Going into the second quarter of 2016, the presidential election is looming over the US, as is a further rise in interest rates.
Bowers says that investors are finding it hard to understand which direction the country will go in, as slowing global growth and tumbling commodity prices continue to be a headwind for the US.
However, one bright spot is consumer spending, with is improving as wages start to recover.
The 'internet of things' is a term used to describe a network of objects that can communicate with each other, and us, using technology.
This is a theme in the portfolio that Bowers is particularly excited about, and predicts will change the face of how we communicate with one another, not just in the US but all over the world.
He cites the example of driverless cars, which Google has already taken to the pilot stage.