One of the most memorable symbols in mutual fund marketing is the mountain chart that tracks the ascending value of an investment in Templeton Growth Fund, launched in Canada in 1954 by the legendary Sir John Templeton.
Although the famous mutual fund's long and steady growth record is an impressive accomplishment, the principal challenge that Toronto-based fund sponsor Franklin Templeton Investments Corp. now faces is telling the world that the giant fund organization can contribute on many fronts to a diversified, multi-asset class portfolio, says Duane Green, the firm's new president and CEO.
"We're working to change the perception of who we are, to let people know we're a lot more than a Templeton global equity, value shop," says Green, 44, who was appointed president and CEO in January, replacing Don Reed, who retired after 27 years at the firm.
Although traditional Templeton-branded global equity products make up about a third of the $40 billion in assets under management (AUM) on behalf of Canadian investors, the firm also has significant AUM in multi-fund managed solutions. Those include its Quotential multi-fund portfolios, as well as global fixed- income, balanced and yield- focused products and funds under the Franklin Bissett banner. The firm also has taken the plunge into new investment categories: alternative strategies; low-volatility, target-return funds; and ETFs.
The past year has been the most active one for product introduction at Franklin Templeton since 2000, Green says. The firm ventured into new territory in Canada with the launch (to accredited retail investors) of Franklin K2 Alternative Strategies Fund, previously accessible only to the firm's institutional clients in Canada. A retail version launched earlier in the U.S. has been hugely popular.
That fund is diversified using four investing strategies and offers the expertise of several international hedge fund subadvisors. The allocations include: long/short equities; relative value; event-driven; and global macro. The goal is to offer protection in down markets with participation in up markets.
The firm also introduced Franklin Target Return Fund, which seeks to control volatility and offer a return of four percentage points above the FTSE TMX 91-day T-bill index over rolling three-year periods. The fund invests in growth, defensive and stable assets. That mix changes with market conditions.
Earlier this year, Franklin Templeton took the plunge into the ETF market in Canada by launching the firm's first suite of four ETFs, including two actively managed ETFs and two strategic beta ETFs. More are planned. The two strategic beta ETFs include a U.S. equity and an international equity ETF; the two active ETFs include a Canadian equity ETF and a Canadian investment-grade corporate bond ETF.
Green views the addition of ETFs as another product line serving the needs of financial advisors and their clients - not as a replacement for mutual funds. The company's ETFs are likely to become an additional component in its multi-fund strategic portfolios, including Franklin Quotential portfolios. The ETFs also will serve the needs of advisors and clients attracted to ETFs for their intraday liquidity and lower management fees.
Although there's some "human involvement" in the actively managed and strategic beta ETF portfolios, they don't duplicate the strategies of Franklin Templeton's actively managed mutual funds, the latter of which still have an important role to play, Green says.
"We need to be the quarterbacks, understanding advisors and their challenges and helping them build their businesses and communicate with clients," Green says. "We offer not only a range of product solutions, but access to retirement specialists, as well as high net-worth and other experts to help advisors use the appropriate products."
Many advisors now look to partner with investment managers who can take care of investment strategy, asset allocation and tactical shifts, leaving the advisor to focus on other aspects of the financial planning relationship, such as tax and estate planning or insurance needs, Green says.
Other advisors are adding to their own investing qualifications and taking on the role of a discretionary portfolio manager with investment responsibilities. These advisors are looking for best-in-class investments to provide specific niche exposure in a diversified portfolio - such as emerging markets, alternative strategies or high yield - rather than demanding fund-of-funds portfolios.
Franklin Templeton has trimmed redundancies from its mutual fund product line, reducing it to 50 mandates (excluding corporate-class funds). That's down from a peak of 72 in 2005. The pricing structure also has been simplified to have fewer variations. Overall, fees are lower.
Green, who spent his first years at Franklin Templeton building investment-management alliances with insurance companies' clients, views wholesaling as more of a relationship business than ever. He points to Franklin Templeton's progress in this area, as indicated by it receiving a 2016 DALBAR Canada mutual fund service award, marking the 11th year in a row Franklin Templeton has won the award in the broker-distributed category.
Last year also was the fourth straight year the firm has been in DALBAR Canada's winner's circle for customer service overall. Green says Franklin Templeton is well diversified between retail and institutional business. A strong contribution is made by subsidiary Fiduciary Trust Co. of Canada, which offers trust and estate planning services.
"The new Franklin Templeton is looking to partner with various distributors and intermediaries, consultants, advisors and gatekeepers," says Green. "Because we don't own a distribution arm, the formation of strong relationships is vital to our business."
Green's first job in the financial services business was in Windsor, Ont., as an insurance salesperson for Metropolitan Life Insurance Co. of Canada, a position he took to gain a foothold in the financial services sector after graduating from the University of Ottawa with a degree in economics in 1994.
In 1996, he expanded his qualifications to become an independent financial advisor, then joined Clarica Life Insurance Co. in 1999 as an investment product wholesaler. Clarica, which had taken over Metlife, became part of Sun Life Assurance Co. in 2002. Green sold insurance, segregated funds and mutual funds, gaining what he calls "a well-rounded set of experiences" before joining Franklin Templeton in 2004 as vice president, strategic alliances, responsible for insurance company clients.
In 2008, Green was promoted to head up Franklin Templeton's entire Canadian institutional business; then, in 2015, he became managing director for Canada, responsible for retail, institutional, high net-worth, marketing, business operations and strategy groups. This gave him a multi-faceted view of the company before his promotion to president and CEO in January.
"I may have always had designs on being on the corporate side, but I wouldn't trade my early experience of sitting down and talking with clients," Green says. "It has given me perspective on what advisors and clients need."
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