The next industrial renaissance

CONTRIBUTORS

Serena Perin Vinton, CFA

Portfolio Manager
United States

Joyce Lin, CFA

Portfolio Manager
Co-Director of Research
United States

Robert Rendler, CFA

Portfolio Manager
Research Analyst
United States

The latest industrial transformation appears to be here and is accelerating due to the pace of innovation and the need to build resiliency in the system. The COVID-19 pandemic, trade war and geopolitical instability each highlighted the dangers of overly concentrated supply chains and long lead times. Manufacturers experienced the pressures of supply-chain risk as unfilled orders, delayed shipments and surging prices wreaked short-term havoc on their business models. Companies are now accelerating the evaluation of reshoring or nearshoring manufacturing capabilities to build better flexibility into their operations. The factory of the future is going to go beyond simply adopting new technologies and digitalization: We believe concepts such as resiliency and sustainability will be a cornerstone of their design. From a technology perspective, this transformation will encompass automation, robotics, smart systems, virtualization, Internet of Things (IoT), big data analysis, machine learning and artificial intelligence (AI).

Topics covered in this publication include:

Industrial digitalization
Sustainability and resiliency
Massive capital investments

Read the full paper to learn more about the next industrial renaissance.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Equity securities are subject to price fluctuation and possible loss of principal.

To the extent the portfolio invests in a concentration of certain securities, regions or industries, it is subject to increased volatility.

Investments in fast-growing industries like the technology and health care sectors (which have historically been volatile) could result in increased price fluctuation, especially over the short term, due to the rapid pace of product change and development and changes in government regulation of companies emphasizing scientific or technological advancement or regulatory approval for new drugs and medical instruments.

IMPORTANT LEGAL INFORMATION

This material is provided for general informational purposes only and should not be considered individualized investment advice, a recommendation or a solicitation to adopt any investment strategy. It does not constitute legal or tax advice. Franklin Templeton accepts no liability for losses arising from use of this material.

The views expressed are those of the investment manager as of the publication date and may change without notice. These opinions and analyses are based on certain assumptions, including market conditions that may change. They may differ from those of other portfolio managers or from the firm as a whole.

This material is not intended to provide a complete analysis of all material facts regarding any country, region or market. No assurance can be given that any forecast, projection or prediction regarding economies or financial markets will be realized. References to specific securities are for illustrative purposes only and should not be interpreted as recommendations or a solicitation to buy, sell, or hold any security.

Any research or analysis in this material has been prepared by Franklin Templeton for its own purposes and is provided incidentally. While the information included is believed to be reliable, its accuracy and completeness cannot be guaranteed, and it is subject to change without notice.

Past performance does not guarantee future results, or any profit or gain. All investments involve risks, including possible loss of principal.

Franklin Templeton offers environmental, social and governance (ESG) capabilities, though not all strategies or products incorporate ESG as part of the investment process.

Investment strategies and services may not be available in all jurisdictions. Please consult your financial professional or Franklin Templeton contact for further information.

Brazil: Issued by Franklin Templeton Brasil Ltda. Canada: Issued by Franklin Templeton Investments Corp. Offshore Americas: In the United States, this publication is made available by Franklin Templeton. United States: Issued by Franklin Templeton. Investments are not FDIC insured; may lose value; and are not bank guaranteed.

Europe: Issued by Franklin Templeton International Services S.à r.l., 8A, rue Albert Borschette, L-1246 Luxembourg. Poland: Issued by Templeton Asset Management (Poland) TFI S.A.; Rondo ONZ 1; 00-124 Warsaw. Saudi Arabia: Issued by Franklin Templeton Financial Company, 13512 Riyadh, Saudi Arabia. Regulated by CMA. License no. 23265-22. South Africa: Issued by Franklin Templeton Investments SA (PTY) Limited, which is authorised by the FSCA as a Financial Service Provider (No.44475). Switzerland: Issued by Franklin Templeton Switzerland Ltd, Talstrasse 41, CH-8001 Zurich. Middle East & Africa (ex South Africa): Issued by Franklin Templeton Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority. Address: Franklin Templeton, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E. Tel: +971(04) 428 4100. United Kingdom: Issued by Franklin Templeton Investment Management Limited (FTIML), registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL.

Australia: Issued by Franklin Templeton Australia Limited (ABN 76 004 835 849) (Australian Financial Services License Holder No. 240827), Level 47, 120 Collins Street, Melbourne, Victoria 3000. Hong Kong: Issued by Franklin Templeton Investments (Asia) Limited. Japan: Issued by Franklin Templeton Japan Co., Ltd. South Korea: Issued by Franklin Templeton Investment Advisors Korea Co., Ltd. Malaysia: Issued by Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. & Franklin Templeton GSC Asset Management Sdn. Bhd. Singapore: Issued by Templeton Asset Management Ltd. (UEN) 199205211E. 2 Central Boulevard, IOI Central Boulevard Towers, West Tower #34-01, Singapore 018916.

Access your local website at www.franklinresources.com/all-sites.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.