Investing in Innovation

Franklin DynaTech Separately Managed Account

We believe there is no greater force for driving growth and creating value in the economy than innovation. In this video, Matt Moberg, SVP, Portfolio Manager, Franklin DynaTech SMA, discusses investment themes and current events related to the strategy.

Matt Moberg

“We strive to live at the intersection where new ideas can make great long-term investments.”

Matt Moberg
Portfolio Manager since 2004

Franklin DynaTech is a diversified growth strategy which has focused on investing in innovation since 1968. The investment team researches, investigates, explores, studies and scrutinizes the greatest innovations of our time, looking for the best potential investments. They seek to identify those companies and industries with compelling products, new processes, strong management and disruptive technologies. At the heart of their process is a belief that innovation drives wealth creation, innovation is pervasive and accelerating, and investing in innovation requires active management.

Franklin DynaTech: Platforms of Growth1

The Franklin DynaTech investment team expects five platforms of growth to generate considerable economic value over the next five to ten years.

Global E-Commerce

It’s easy to think that global e-commerce is late stage, but we believe there is so much further to go. E-commerce is transforming commercial transactions through streamlined procurement systems, as well as bringing rise to new online markets such as ride sharing, home sharing, luxury apparel rental, apparel consignment, and leveraging internet influencers.

Genetic Breakthroughs

The gene was discovered in 1953,2 but was first sequenced in 2003 at a cost of $100 Million.3 The decreasing cost of genome sequencing is leading to an explosion in new technologies that are designed to extend and enhance the quality of human life, including diagnostics, gene muting, breakthrough therapy, gene editing, health and wellness, and the agricultural use of genetics to improve food taste and quality.

Intelligent Machines

The last 30 years were spent organizing data with mainframes, personal computers, and mobile phones and we believe the next 30 years could repurpose that data to change our lives. Improvements in data, algorithms, and networking have led to new designs with more individualized products, specific to our own needs. Potential investments include autonomous driving, sensor and connector producers, semiconductors that drive artificial intelligence, software that helps in product design, factory automation, and network enablers.

New Finance

The level of innovation that is permeating the marketplace is affecting money itself. Currencies are now backed by algorithms, not just precious metals. Today we are increasingly using data to help price risk appropriately and allocate capital in more efficient ways. And how we pay for things is moving away from cash, checks and credit cards to mobile payments and digital wallets.

Exponential Data

Data, data, data. It is the underlying factor in almost all of our platforms. Without data, none of these platforms would be successful. But data isn’t virtual, it needs to be collected, stored and delivered. That means there needs to be overhauls in the amounts and structures of data centers, fiber-optic cable, towers and other supporting infrastructure. Artificial Intelligence, computer power and memory are crucial to the next stage of actually using the data. The creation, cleaning, storage, and delivery of data will lead to new applications like Augmented and Virtual Reality, Artificial Intelligence & Machine Learning, Software as a Service, and the Sharing Economy.

Franklin DynaTech SMA may be an optimal way to harness the wealth creation power of these innovations and others over a long term investment horizon.

  1. This commentary reflects the analysis and opinions of the Franklin DynaTech investment team and may differ from the opinions of other portfolio managers, investment teams or platforms at Franklin Templeton. Because market and economic conditions are subject to rapid change, the analysis and opinions provided may change without notice. The commentary does not provide a complete analysis of every material fact regarding any country, market, industry or security. An assessment of a particular country, market, security, investment or strategy is not intended as an investment recommendation nor does it constitute investment advice. Statements of fact are from sources considered reliable, but no representation or warranty is made as to their completeness or accuracy.
  2. Heather JM, Chain B. The sequence of sequencers: The history of sequencing DNA. Genomics. 2016;107(1):1–8.!po=1.35135
  3. National Human Genome Research Institute. (2019, October 30). DNA Sequencing Costs: Data.