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Franklin European Small-Mid Cap Growth Fund - News
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Sector Changed
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Thursday, 20 June 2019
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Official Announcement
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The fund changed sectors from Europe--Equity--Varied Specialist to Global--Equity--Small Cap on 20 Jun 2019
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Franklin Eur Small-Mid Cap 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 Small-Mid Cap Growth Fund returned net -4.89% (in euros). Its benchmark, the Morgan Stanley Capital International (MSCI) Europe Small-Mid Cap Index, returned 0.71% (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
During the first quarter of 2011, maintaining zero weightings in the materials and telecommunication services sectors contributed to relative fund performance, as did stock selection in the health care sector. Additionally, an overweighting of the electrical equipment industry within the industrials sector proved favorable. In contrast, stock selection in the consumer staples, financials and industrials sectors had a negative impact on relative results, as did an overweighting and stock selection in the consumer discretionary sector. 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. Furthermore, shares of biotechnology firm Genus PLC climbed after the firm reported a substantial increase to revenues and pre-tax profits for the last six months of 2010, boosting returns in the health care sector. Conversely, a position in UK-based private-label goods maker McBride PLC negatively impacted performance in the consumer staples sector, and a position in carpet retailer Carpetright PLC further weighed on results among consumer discretionary firms. We remain encouraged about the long-term prospects for both of these UK-based companies even in the face of challenging, anemic domestic economic growth. 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 disappointed in the industrials sector. Elsewhere, a position in diversified holding company RHJ International negatively impacted relative performance. In addition, a position in Savills PLC, a United Kingdom-based property advisory company, proved adverse among financial firms. On a regional level, stock selection in Italy had a positive effect on relative fund returns, as did an overweighted allocation to Greece and an underweighted allocation to Switzerland. However, stock selection in the UK, Belgium, France and Austria negatively impacted results.
Investment Outlook
Through our bottom-up process and focus on downside risk, we continue to find opportunities in both the consumer staples and industrials sectors.
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Franklin Eur Small-Mid Cap 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 Small-Mid Cap Growth Fund returned net 0.00% (in euros), while its benchmark, the MSCI Europe Small-Mid Cap Index, returned -4.70%, 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
Stock selection within the financials and health care sectors produced strong relative contributions to fund performance in the second quarter. In addition, stock selection and an overweighted allocation in industrials, plus stock selection in information technology, further benefited relative returns.
In the financials sector, a position in Lancashire Holdings Ltd., a global provider of property and casualty insurance operating in Bermuda, helped performance. In health care, a position in Genus PLC, a UK-based animal breeding company, also benefited returns.
In the industrials sector, a position in Homeserve PLC, a UK provider of home emergency repair insurance, benefited results. 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.
Additional holdings that contributed strong relative returns, during the period, included Rotork PLC (information technology), a UK-based maker of industrial valve controls for oil refining, chemical and water industries; and Dignity PLC (consumer discretionary), a UK-based holding company engaged in the provision of funeral services.
In 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.
In contrast, an underweighted allocation to the consumer staples sector negatively impacted returns.
Certain holdings in the consumer discretionary sector also weighed on portfolio results for the period. 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 was a notable detractor from relative results for the quarter. On a regional level, stock selection in the UK, Germany and Switzerland had a positive effect on relative fund returns. Not holding any stocks in Spain was also a notable positive for relative performance. However, an overweighted allocation to Greece versus the benchmark, in addition to stock selection in France, 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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