Franklin Templeton Investments' biotechnology fund is an open-ended investment company that invests in biotechnology companies, mostly based in the US.
The panel are enthusiastic over the way the fund fits into the market. Jackson says: “The fund has been launched at a prime time. The discovery of the genetic code could lead to phenomenal success for this product and for others with a link to biotech stocks.”
Hooper says: “I feel there is a place for this product, especially for the more adventurous investor who may be wor-ried about other types of technology trusts which have not had the best press recently.”
Cox says: “This is another niche fund for investors who like to speculate. It is a good way to obtain exposure to the biotech market.”
Eke says: “It fits quite nicely. Although there are other pharmaceutical funds avail-able, they are not focused on biotechnology.”
Looking at the types of client for whom the fund is suitable, Cox says: “This is for the investor who likes to specul-ate over the longer term, who understands the risk and who accepts the volatility. Some investors are very interested in this area and this would be a good way to get into it.”
Eke says: “This is only suitable for the speculative investor as the product is very volatile. Even then, it needs to be for the experienced investor as a part of a large portfolio.”
Jackson says: “This has above-average risk and is not for the last couple of thousand pounds of a client's nest egg.”
Turning to the marketing opportunities that the product provides, Ball says: “It should appeal to the 25-45 age bracket and upwardly mobile clientele who are not risk-averse.”
Eke thinks the fund offers an opportunity to invest in what could become a major growth area and that it is always best to get in at the start.
Jackson says: “This product would be welcome for clients requiring growth on their money. It will add weight to a wider spread on a portfolio. The long-term prospects look very good. It could well be included in an income portfolio by using part of the capital gains allowance.”
Hooper says: “Biotech-nology is an area which iscurrently being promoted by several investment houses and has stirred quite a bit of interest. People are linking this with the breakthrough in the DNA code.”
Evaluating the strong points of the product, Jackson says: “First, Franklin Templeton has a good name and the fund manager has a good track record. Second, the US version of the fund has had exceptional results since 1997. Third, everyone will need some form of technology in their lifetime, so why not invest in a portion of it?”
Hooper says: “It taps into the future of medicine and the genetic code. Also, there is a vast number of companies to choose to invest in worldwide.”
Eke says: “There seems to be a growing interest in preventative medicine as evidenced by the interest in natural medicines. Natural medicine, like biotechnology, generally aims to treat the cause of an illness rather than the illness itself. The potential growth in this area is the strong point.”
Turning to the other side of the coin, when asked to list the drawbacks of the fund, Ball says: “As with life, there are no guarantees and, with 200 biotech products already on the market, they are not the driving force for certain success. Development is expensiveand you therefore only needa couple of failures to damage the credibility. This is not a gamble for the faint-hearted.”
Eke says: “The main disadvantage is that this type of fund is at an early stage, at least in the UK, and it is therefore risky to invest in an un-proven market. As a thematic investment, it could also suffer if there is adverse publicity resulting from a test or any kind of error.”
Hooper cannot identify any disadvantages to the product, while Cox says: “Like all specialist funds, there is no room for diversification when the sector is out of favour.”
Jackson says: “There are other more established companies already on the mar-ket. Also, it may flop, like some technological stocks. Another disadvantage is that the value might rise too steeply too quickly and then drop back severely.”
Examining the investment strategy, the panel are positive. Ball says: “Seeking out companies with a good research and commercial background in a relatively new field like human DNA is a potential recipe for success. I like this gamble, as it should ensure longevity in the future.”
Hooper says: “The strategy is very good. Ten years ago, the more adventurous investor was looking at computer technology, which paid off. In my opinion, this is a strong replacement.”
Eke says: “The investment strategy is sound as it aims to invest in biotechnology companies across the board. As the companies have relatively small capitalisation, underperformance in one area will not affect the fund too drastically. Investing in fewer companies will obviously increase the risk and it seems to have the option to do that.”
Looking at the reputation of Franklin Templeton, the panel are lukewarm, with Ball saying: “A couple of its funds are good but it is not my favourite provider.”
Hooper says: “Templeton is not a company that I have used in the past. It seems to do very little to promote itself.”
Cox regards the company as having a low-key reputation in the UK and says it is better known as an offshore provider.
Eke says: “Franklin Templeton has a reasonable reputation but this is based primarily on its Latin America and emerging markets funds.”
Only Jackson thinks it has a good reputation.
Examining the product literature, the panel are in two minds. Ball says: “It is unexciting and, with 'Life and death' written on the cover, it is a bit of a turn off.”
Hooper feels the literature is very basic and could have offered more detailed information, while Jackson says: “It is a little dull. Perhaps a little colour or a few graphics might have added a little spice to the product. However, all the necessary product information is included and is easily readable.”
On the other hand, Cox says: “It is reasonable and quite easy to read. It gives a view of the potential but also points out the risk and the volatility.”
Eke comments: “The literature is simple, easy to read and is not daunting to the investor. I like it.”