Speaking exclusively to InvestorDaily, Franklin Templeton Equity Group portfolio manager Donald Huber earmarked a number of areas within the technology sector that Franklin Templeton had invested in.
“The secular growth of ecommerce continues, and leading companies often have a strong first-mover advantage and attractive cash flow characteristics,” Mr Huber said.
“Investors do need to watch the investments these companies make in tangential and unrelated businesses, or in their core business to build out their distribution and logistics.”
He added that the opportunities were not just limited to the “retailers themselves” but also along its supply chain to those companies that provided “infrastructure and services for retailers”.
Investment openings were also found in the electrification and autonomation of vehicles as well as “enterprise security software”, which would see “experience secular growth given constantly increasing cybersecurity threats”.
Still more opportunities existed in what is a “very large and diverse sector,” Mr Huber argued.
“Last year, for example, we invested in a company that provides enterprise resource planning and related software for local governments, primarily in the US.
“While cities, counties and states are not known for aggressive spending on their systems, in many cases the software they run on is so old and outdated that these governments have no choice but to replace,” he said.
However, Mr Huber cautioned investors about the use and privacy of data, which was a concern for many industries and sectors where “customer data, activity, preference and payment information” was involved.
“Online, consumers have known to varying degrees that companies collect and share user data to enhance the user experience, by serving up more relevant content and advertising, but the extent of data collection and sharing still is not widely recognised,” he said.
It remained to be seen whether “consumer backlash” would result from the recent controversy surrounding Facebook’s data privacy breach.
“To a large extent, the horse may already be out of the barn in terms of online data privacy, but business models that are built solely around the monetisation of sensitive user data will need to proceed with caution, as recent regulatory issues illustrate.”
