Fund Description

The fund seeks long-term capital appreciation by investing substantially in the equity securities of companies that are leaders in their industries, and which the managers believe are suitable for a buy-and-hold strategy.

Strategy Statement

"Our investments emphasize well-established companies and household names, which we hold for the long term. This has historically resulted in very low annual turnover for the fund. "

Serena Perin Vinton, CFA®

Management

Serena Perin Vinton, CFA

Serena Perin Vinton, CFA®

  • Joined Franklin Templeton in 1991
  • Managed Fund Since 2008
John Anderson

John Anderson

  • Joined Franklin Templeton in 2013
  • Managed Fund Since 2016
Robert Rendler, CFA

Robert Rendler, CFA®

  • Joined Franklin Templeton in 2005
  • Managed Fund Since 2016

INVESTMENT PHILOSOPHY, STRATEGY AND APPROACH

Investment Philosophy

The Franklin Equity Group philosophy holds that companies with the potential for long-term sustainable growth can provide significant opportunities for investors. Market participants can have a short-term perspective and may under appreciate the potential for value created by sustainable growth. We believe that we have the potential to deliver superior risk-adjusted returns by identifying companies with potential for sustainable growth which we believe is not reflected in current prices.

Investment Process

Within a collaborative environment, our team utilizes fundamental, bottom-up research to focus on companies that we believe have sustainable growth characteristics—meeting our criteria of Growth, Quality and Valuation.

Our analysis includes an assessment of any material Environmental, Social and Governance (ESG) factors on the long-term risk and return profile of a company.

Growth

  • Focus on companies with potential to produce sustainable earnings and cash flow growth
  • Evaluate the long-term market opportunity and competitive structure of the industry seeking to identify target leaders and emerging leaders

Quality

  • Seek companies with strong and improving competitive positions in attractive markets
  • Identify experienced and talented management teams as well as financial strength reflected in the capital structure, gross and operating margins, free cash flow generation, and returns on capital

Valuation

  • Consider a range of potential outcomes based on an assessment of multiple scenarios
  • Evaluate whether, in our view, security prices fully reflect the balance of the sustainable growth opportunities relative to the business and financial risks

Rating

Overall Morningstar Rating As of 10/31/2019

Rating Category: Large Growth

Morningstar
The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating [further-information] As of 10/31/2019

Years Ratings Funds
in category
3
3 Stars
1232
5
4 Stars
1095
10
3 Stars
813

Morningstar Style Box As of09/30/2019

Strategy, Benefits, Results

Strategy

We use fundamental, bottom-up research to find large, established companies that meet our criteria of:

  • Growth. Our team focuses on companies with the potential to produce sustainable earnings and cash-flow growth.
  • Quality. We seek high-quality companies with strong management teams and financial strength.
  • Valuation. We assess whether the growth opportunity is already reflected in the stock price.

Benefits

  • Tenured and experienced portfolio management team.
  • Distinct research structure. Investment professionals organized into collaborative sector teams.
  • Historically low portfolio turnover ratio, based on long-term investment focus ranging three to ten years.

Selling The Fund

  1. Point out the fund’s long performance track record dating back to 1948.

  2. Explain the benefit of the fund’s buy and hold strategy, which has historically resulted in a low portfolio

    turnover ratio, and potentially lower taxable distributions.

  3. Emphasize the tenure and experience of the fund’s management team.