Team Favorite: Jenny Johnson on Managing a Trillion-Dollar Firm
Dec 29, 2023
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Jenny Johnson, President and CEO of Franklin Templeton, discusses the importance of team performance, the history of acquisitions at Franklin Templeton, the transformative power of AI in business, remote work adaptation, long-termism vs short-termism in asset management, the impact of changing interest rates on running a firm, and recent watchlist and favorite books.
Franklin Templeton has a strategic approach to acquisitions, focusing on filling product gaps and strengthening distribution.
Franklin Templeton shared insights on investing in global markets, particularly in regions like India and China.
Franklin Templeton has been expanding its product offerings through various acquisitions, aiming to provide a comprehensive range of products to institutional and retail clients.
Deep dives
Franklin Templeton's Approach to Acquisitions
Franklin Templeton has a strategic approach to acquisitions, focusing on filling product gaps and strengthening distribution. Recent acquisitions include Leg Mason, which provided scale in fixed income and access to alternative investments through Clarion Partners; Putnam, to build a closer relationship with Power Corp and expand in the retirement channel; and O'Shaughnessy Investments with its direct indexing product called Canvas. Franklin Templeton also sees opportunities in infrastructure and local asset management in regions like Asia and the Middle East.
Insights into Global Markets and Investments
Franklin Templeton shared insights on investing in global markets, particularly in regions like India and China. They highlighted India's strong demographics, British legal and education systems, and growing optimism among Indians about the country's future. As for China, its economic strength and the trend of companies staying private longer present investment opportunities. Franklin Templeton also emphasized the importance of sustainability in the Middle East and its potential as an innovation hub for renewable energy. Moreover, they discussed how volatility and rising interest rates are benefiting fixed income investments and active managers.
Money Market Funds and Current Market Outlook
Franklin Templeton discussed the evolution of money market funds, noting that they are now more secure and yield higher returns. Investors have been attracted to money market funds due to the potential for higher yields. Looking ahead, Franklin Templeton anticipates an end to the rate hike cycle, with the Federal Reserve likely to raise rates one to two more times this year. They also mention that investors should be cautious as they approach the end of the cycle.
Franklin Templeton's Expansion and Product Offerings
Franklin Templeton has been expanding its product offerings through various acquisitions, aiming to provide a comprehensive range of products to institutional and retail clients. These acquisitions include a privately managed account provider, a robo-advisor platform, an alternative credit manager, and more. The goal is to be a strategic partner, offering solutions for clients' investment needs and becoming the first phone call when they face challenges.
The Importance of the Registered Investment Advisor (RIA) Space
The RIA space has become increasingly important in Franklin Templeton's business strategy. With the growth of fee-based environments and the ability for individuals to set up their own advisory businesses, the RIA channel has become a crucial avenue for Franklin Templeton's growth. While historically stronger in the Wirehouse and independent channels, Franklin Templeton recognizes the importance of the RIA space and aims to cater to the specific needs of these advisors by offering services tailored to their requirements.
On a special 500th-episode edition of Masters in Business, Bloomberg Radio host Barry Ritholtz speaks with Jenny Johnson, the president and chief executive officer of Franklin Templeton. Johnson joined the firm in 1988 and held leadership roles in all its major divisions, including investment management, distribution, technology, operations and high-net-worth, before becoming CEO in February 2020. She also led the historic acquisition of Legg Mason in 2020, with the combined organization managing more than $1.5 trillion globally. Among many other accolades, she has been named to Barron's list of the 100 most influential women in US finance for three consecutive years, most recently in 2022.
