Intensifying demand to have everything at one’s fingertips seems to be the driving force behind the innovation in technology, finance and even industrials. Franklin Equity Group’s Matt Moberg, vice president and portfolio manager, Franklin DynaTech Fund, observes a general shift in the technology industry to address evolving consumer needs. He explains why the “always-connected” trend could bring technology into the front offices of most industries in 2017, and beyond.
Technology has been accelerating at such a rapid pace over the past few years across the globe, so it’s tempting for investors to look ahead and ask “what’s next?” The industry is thriving, and we believe the transition to technology-on-demand will likely integrate technology even further in our day-to-day lives in the years ahead.
Technology is a far-reaching term these days, and it increasingly applies to non-information technology (IT) sectors, too. In recent months, many investors seem to have pivoted toward sectors with a more cyclical component, such as the financials, industrials and to some extent, energy. These sectors are leaders in the development of innovative products or prominent suppliers of unique technology, and what we’ve witnessed in on-demand technology and services is early evidence of what could be possible in these industries.
Our broad mandate lies in investing in “dynamic technologies,” which we define as having a force that stimulates change or progress. So if innovation is where the bulk of wealth creation occurs, we look for innovation across all sectors.
We think fundamental research is a valuable tool in identifying innovative, growing companies that can provide investment opportunities regardless of shifting markets. We also believe active management is needed to successfully invest in innovation—an aspect of the market that is often misunderstood. Misunderstandings often mean that investment opportunities get overlooked.
The Drive behind Technological Change
The IT sector has remained strong this year, and we believe this is due in no small part to a more enthusiastic reaction to new technology by a wider array of businesses. Industries that were once reluctant to adopt new technology due to lack of testing are now seeing technological developments as opportunities, brought about by the surge in so-called “hyper-connected” users.
We have seen early evidence of what is possible in the transportation and financial services industries—smartphone applications can notify train departures down to the minute; travel planners read live traffic updates and re-route journeys if necessary; and stop-loss orders can be placed on mobile trading platforms. And with increased usage and dependency on mobile apps, we’ve witnessed a transition to services being made available on-demand through cloud-based computing, artificial intelligence (AI) and digital payments.