Franklin Global Growth (ASX: FRGG) remains a compelling option for investors seeking exposure to secular growth themes through a high-conviction, mid-cap-oriented global equity strategy. The approach is grounded in deep fundamental research and a disciplined focus on economic diversification, aiming to reduce correlation across holdings by targeting companies at different points along a theme’s supply chain. While this structure can introduce higher volatility, it has historically supported strong long-term outcomes.

The strategy continues to benefit from the leadership of Don Huber, who remains actively involved and brings over four decades of investment experience. Huber is supported by Patrick McKeegan, who has assumed a broader leadership role as the co-lead portfolio manager and co-head of the Franklin Equity Group, and Samantha Matthews, who was promoted to a portfolio manager in late 2024. The team has navigated recent changes in the portfolio-management team—including the retirement of John Remmert and the departure of Francyne Mu and Yan Lager—through a proactive and well-structured succession plan. The broader analyst bench remains deep and experienced, with a culture that emphasizes internal development and accountability.

The investment process is robust and repeatable, combining bottom-up research with a clear valuation framework and a strong emphasis on risk oversight. Recent enhancements—including a refined sell discipline, increased focus on new idea generation, and formalized sector reviews—demonstrate the team’s commitment to continuous improvement. The portfolio remains concentrated, typically holding around 35 names, and maintains a structural bias toward mid-cap growth companies.

While the strategy has delivered strong long-term results, recent performance has lagged amid a market dominated by mega-cap rallies and value rotations—challenges that are cyclical rather than structural. With a thoughtful evolution of the process and a stable leadership transition underway, the strategy remains well-positioned to reward patient investors over the long term.

Investment process

The strategy targets secular growth themes through a benchmark-indifferent, bottom-up approach that emphasizes economic diversification. Analysts group companies by revenue drivers rather than sectors, selecting one high-conviction name per theme to reduce correlation across holdings.

The team’s proprietary research framework integrates qualitative, quantitative, and environmental, social, and governance analysis. All ideas must be rated “outperform” or “sell,” reinforcing accountability. A refined 20% downside rule now biases toward exiting newer positions unless the thesis is reaffirmed. Formal sector reviews and a new head of risk have added forward-looking oversight.

The portfolio typically holds 35 names, with position sizes capped at 5%. Turnover has modestly increased owing to incentives for new idea generation, but the strategy remains long-term in orientation. Liquidity is strong, and capacity is well below the limits. This disciplined, repeatable process has proved resilient across market cycles and continues to evolve without compromising its core philosophy.

The strategy focuses on building a high-conviction portfolio comprising sustainable, high-quality businesses. Given its index-agnostic approach, it has a significantly high active share with respect to the comparable market-weighted indexes. In its search for growth companies, the strategy has a bias toward mid-cap names, which adds incremental risk to the relatively concentrated portfolio of 35 stocks. That said, the strategy aims to diversify away some of the concentration risk by holding companies with relatively uncorrelated revenue streams and by limiting individual weightings typically between 1.5% and 4.0%.

The strategy is typically overweight emerging markets, accounting for approximately 7% of the portfolio, but with a leeway to invest up to 20%. Technology and healthcare remain among the largest sector allocations and overweightings. The portfolio can hold up to 10% in cash, though historically, the team has kept this number below 5%. Historical portfolio turnover has been reasonably low (20%–30%) but has increased recently due to a greater focus on new idea generation.

Get more of Morningstar’s insights in your inbox