Franklin Mutual US Value A acc SGD |
Morningstar's Take
|22/03/2024by Greg Carlson
| An increased focus on stock selection in this strategy in recent years, coupled with a team that has seen changes and lacks a clear edge, results in uncertain prospects. The team that supports this fund has seen substantial changes. Another experienced manager and analyst, Katrina Dudley, left the team at the end of February 2024 for another role at Franklin. And in late 2020, CEO and CIO Peter Langerman, a longtime manager of this fund, announced his retirement. Three other veteran portfolio managers from the broader team then left, including David Segal, another veteran manager of this fund. Grace Hoefig, the firm’s then-new director of research, joined the fund in late 2020 along with Christian Correa, who also became president and CIO. (Deborah Turner, a longtime assistant portfolio manager, was removed from the roster at the end of 2022 but still serves as an analyst.) Five analysts have been hired to take over the coverage of the departing members (all of whom served as analysts as well, other than Langerman). Most are significantly less experienced than their predecessors, but each has evolved into a contributor to the team’s four largest strategies (including this one). But the revamped team hasn’t executed consistently as yet. While the team has outperformed at one strategy versus its internal benchmark, it has detracted value through security selection at two others, and this strategy has generated mixed results. It's also not clear that the strategy will provide the same downside protection going forward as it once did. The portfolio has gradually become more compact—US fund Franklin Mutual Shares recently held 51 stocks, compared with 90-plus in 2018, and Luxembourg-domiciled portfolio Franklin Mutual US Value held just 43 because it adopted a virtually all-US focus in 2016. In addition, both portfolios are less likely to build cash than they once were when the managers didn’t find enough stocks that met their valuation standards, as the team is wary of cash’s performance drag in strong markets. As a result, Shares’ volatility and downside captures over the trailing three and five years through February 2024 were roughly in line with its average aggressive-allocation peer and category benchmark, even though the fund held up better in 2022’s decline. And Franklin Mutual US Value looked riskier than its category peer and category benchmark on these measures over the same periods. |
Bolder than it once was, and unappealing.To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | Average |
| Parent | Average |
| Process | Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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