Restoring Confidence: Franklin Templeton’s Path Forward
Franklin Templeton CEO Jenny Johnson has pledged to prioritize her clients’ interests amidst the company’s recent financial struggles. The California-based investment firm, which manages a staggering $1.7 trillion in assets globally, has faced significant challenges since announcing the departure of Ken Leech, co-head investment officer of its largest subsidiary Western Asset Management, due to a Securities and Exchange Commission (SEC) investigation.
A Dramatic Financial Hit
The firm has experienced its worst quarter for financial outflows in its history, with a massive $24 billion withdrawn from the troubled unit in a single month. This brings the total outflows from the subsidiary to $37 billion over the past three months, according to reports from the Financial Times. The fixed-income business has also struggled with underperformance, which many investors had hoped would improve as money flows into bonds and other fixed-income products.
Isolated Incident
Johnson emphasized that the issue with Western Asset Management is isolated to an individual and a subset of strategies, and that supporting clients remains Franklin Templeton’s top priority. “We’ve had an issue at Western which is isolated to an individual and a subset of strategies, but there’s definitely been outflows in those strategies,” she stated.
Cooperating with the Government
To restore investor confidence, Franklin Templeton is cooperating fully with the government on the investigation. Johnson assured that the firm’s investment teams are focused on managing clients’ assets, and that resources are in place to support them.
A Long History of Success
Western Asset Management has a long history of managing assets through various market cycles, and Johnson expressed confidence in the firm’s ability to bring money back. “We have a lot of different brands under Franklin Templeton, and outside of Western, we’re actually in positive flows through the rest of our business,” she said.
Doing What’s Right
Johnson’s philosophy is simple: do what’s right by the client, and the business will take care of itself. As she stated, “My father always said, do what’s right by the client, and the business will take care of itself. So we’re 100% focused on making sure that we do right by our clients.”
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