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Franklin European Opportunities Fund - News
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Fund Name Changed
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Thursday, 27 January 2022
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Official Announcement
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The Franklin European Growth Fund will change it's name to Franklin European Opportunities Fund, effective from 27 October 2021
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Franklin European Growth - Mar 11
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Tuesday, 14 June 2011
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Fund Manager Comment
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For the quarter ended 31 March 2011, FTIF Franklin European Growth Fund returned net -4.19% (in euros), versus its benchmark, the Morgan Stanley Capital International (MSCI) Europe Index, which returned 0.74% (also in euros).
Market Review
In the eurozone, economic recovery broadened on the most robust industrial activity since 2000, even though results differed widely between countries. Growing inflation risks prompted the European Central Bank (ECB) to signal the possibility of a near-term hike in interest rates, which had stayed at emergency levels for nearly three years. European leaders agreed to establish a permanent bailout fund and expand its lending capacity at a time when Portugal and Ireland floundered against economic winds. Portugal's failure to approve austerity measures necessary to avert a bailout and its prime minister's subsequent resignation drove the country's borrowing costs to a record high, which along with a wider restated 2010 budget deficit and multiple credit rating downgrades, pushed the country to the brink of insolvency. Ireland's latest round of stress tests and recapitalization plans sought an end to its long-running banking crisis, although so far a solution has proven elusive.
Performance Review and Contributors to Performance
During the first quarter of 2011, maintaining a zero weighting in the materials sector contributed the most to relative fund performance, followed by stock selection and an underweighted allocation to the health care sector. An overweighting of the electrical equipment industry within the industrials sector proved additionally favorable. In contrast, an overweighting and stock selection in the consumer discretionary sector, as well as stock selection in the financials and industrials sectors, had a negative impact on relative results. Within the industrials sector, a position in Prysmian S.p.A., an Italy-based company engaged in the production of cables for diverse applications in the energy and telecommunications industries, was the top fund contributor during the quarter. Its shares rose after the company announced advancements in the pending purchase of a Dutch competitor. A position in France-based worldwide cable supplier Nexans also benefited results after the company won a cable supply contract for a large wind farm project. The company's ability to offer a wide range of cables and installation services has facilitated its recent involvement in several large wind farm projects. In the consumer discretionary sector, a position in Jumbo SA, a Greek discount retailer of toys, seasonal and household items, and stationery, was a notable contributor. Among UK-based financial firms, specialty insurance products provider Lancashire Holdings Ltd. positively impacted fund performance. Conversely, a position in Halfords PLC, a retailer of automotive, leisure and cycling products, was the top detractor during the quarter and curbed relative returns in the consumer discretionary sector. Elsewhere in the sector, a position in carpet retailer Carpetright PLC further weighed on results. We remain encouraged about the long-term prospects for both of these UK-based companies even in the face of challenging, anemic growth in the domestic economy. A position in Flughafen Wien AG, an Austrian holding company based in Vienna that is engaged in the operation of the Vienna International Airport as well as development and building initiatives there, also weighed on results. Elsewhere, several UK-based companies further weakened relative returns, including property advisory company Savills PLC, international retailer Tesco PLC and information services company Experian PLC. On a regional level, stock selection in Switzerland and Italy had a positive effect on relative fund returns, as did an overweighted allocation to Greece. However, stock selection in the UK, Austria, the Netherlands and Belgium negatively impacted results.
Investment Outlook
Through our bottom-up process and focus on downside risk, we continue to find opportunities in both the consumer discretionary and industrials sectors.
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Franklin European Growth - Jun 10
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Wednesday, 25 August 2010
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Fund Manager Comment
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For the quarter ended 30 June 2010, FTIF Franklin European Growth Fund returned net -0.57% in euros, versus its benchmark, the MSCI Europe Index, which returned -5.93%, also in euros.
Market Review
The European sovereign debt crisis gained momentum during the quarter as austerity measures of teetering economies dominated headlines. Europe's rescue loan for Greece, as well as its government debt purchases and stabilization fund for other fiscally strained countries such as Spain, Portugal, Ireland and Italy, failed to inspire global confidence. Greece, Romania and Hungary suffered the biggest equity selloffs, as many countries ran into roadblocks trying to push through unpopular spending cuts and adhere to deficit limits set by the European Union and International Monetary Fund. Some investors worried about possible effects of such tough fiscal medicine and feared Europe would need a long time to recover from its homegrown quagmire. The health of eurozone banks was again called into question with the failure of a small Spanish bank, and consequently, the European Central Bank agreed to widen and publish results of its bank stress tests in July.
Performance Review and Contributors to Performance
Stock selection within the materials sector and significantly overweighted exposure to the industrials sector produced strong relative contributions to fund performance for the second quarter. In addition, maintaining zero weightings in the utilities and energy sectors further benefited relative returns. An underweighting in the materials sector and an overweighting in the consumer discretionary sector also contributed positive relative gains favored by opportune stock selection.
Within the materials sector, a position in a leading manufacturer of flavor and fragrances positively impacted performance. The company reported first-quarter 2010 results that were above expectations.
Notable individual contributors also came from the industrials sector, including a position in Homeserve PLC, a UK provider offering home emergency repair insurance. The company reported a strong set of 2009 results in May despite the adverse economic environment during that time. Moreover, the company continues to successfully expand its services in the U.S., Spain, and France.
In addition, several other industrials positions helped results, including positions in Spirax-Sarco Engineering PLC, an engineering company focused on its two businesses of steam systems and products, and peristaltic pumps; and a company engaged in the business of developing, manufacturing, and marketing of components and systems for vacuum generation, measurement and analysis.
In health care, a position in Genus PLC, a UK-based animal breeding company, also benefited returns. Additional holdings that contributed strong relative returns during the period included Lancashire Holdings Ltd. (financials), a global provider of specialty insurance products operating in Bermuda, London and Dubai; Rotork PLC (information technology), a UK maker of industrial valve controls for the oil refining, chemical and water industries; and Dignity PLC (consumer discretionary), a UK-based holding company engaged in the provision of funeral services.
Stock selection in the consumer discretionary and consumer staples sectors generated negative relative performance in the second quarter. Shares of Carpetright PLC, the leading UK carpet retailer, was especially impacted during the period. A long-term outperforming position, shares of the company were negatively impacted following its announcement earlier in the year that it may miss fiscal full-year profit estimates due to bad winter weather that dampened sales. Additionally, stocks of Greek companies were negatively impacted by uncertainty regarding the resolution of Greece's debt crisis. The fund's position in Greek toy and baby products retailer Jumbo SA was no exception and underperformed more as a result of the country's issues rather than company fundamentals.
In the industrials sector, a position in Nexans, a France-based company engaged in the electrical cable industry, which is not represented in the benchmark, was a notable detractor from relative results in the quarter.
On a regional level, not holding any in stocks Finland and Spain were notably positives for relative performance. Stock selection in the UK, Germany and Switzerland also had a positive effect on relative fund returns, as did an underweighting in France. However, an overweighted allocation to Greece versus the benchmark dragged most on performance.
Investment Outlook
Through our bottom-up process and focus on downside risk, we continue to find opportunities in both the energy and industrial sectors.
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