Franklin Templeton is enjoying a renaissance in what it can offer advisors and their clients in Canada. Duane Green, President and CEO of Franklin Templeton Canada, calls this a “new chapter” for the investment manager.
This chapter started with the 2020 acquisition of Legg Mason and its specialist investment managers by Franklin Templeton’s parent company. That acquisition gave Franklin Templeton a combined US$1.5 trillion in assets under management globally, as of June 30, 2021.
Most important, the move strengthened Franklin Templeton’s investment capabilities across a wider range of asset classes, and enhanced its expertise in sustainable investing.
In March 2021, the firm established a Stewardship and Sustainability Council. Its members represent the diversity and depth of Franklin Templeton’s approaches, as well as each specialist investment manager. Council members are responsible for identifying how to face universal sustainability challenges.
This framework is reinforced by a Global Sustainability Strategy Team, whose mandate is to drive and embed sustainability across the organization.
“We’re bringing new investment capabilities and sustainability expertise to Canadian investors through different platforms,” says Green.
Franklin Templeton’s specialist investment managers have expertise in different areas:
- ClearBridge Investments: global equities
- Brandywine Global: long-term value investing
- Martin Currie: global active equities
- Royce Investment Partners: small cap specialist
- Western Asset: global fixed income
- Clarion Partners: real estate
Together, these proven managers complement the strengths and experience of Franklin Templeton’s legacy investment teams.
Each of Franklin Templeton’s boutique investment teams is autonomous. Being entrepreneurial and independent lets them practise true investment specialization, while tapping into global resources for analytics, data, distribution and servicing support. The firm believes that these experienced investment managers offer differentiated strategies to help Canadians meet their investment goals.
Franklin Templeton delivers these capabilities in the investment vehicles that Canadians want, including mutual funds, ETFs and separately managed accounts (SMAs). With the ability to customize and offer more bespoke offerings to larger institutional clients.
Green says the firm’s new era is about expanding capabilities, to address the needs and wants of Canadian investors. For advisors, the goal is providing a range of differentiated, quality solutions that will truly make a difference to client portfolios.
Focus on sustainability
A big part of that is offering sustainable solutions. The ethical and business cases behind sustainable investing are clear, along with its growing importance to investors.
There’s an increasing body of evidence that points to sustainability as a theme for continued fund inflows. Morningstar reported that, at the end of the second quarter of 2021, sustainable assets in Canada (excluding fund of funds) hit $26 billion. That reflects a year-over-year growth rate of 130%.1
Some of Franklin Templeton’s boutique investment teams have prioritized investing according to sustainability principles for years.
For example, in 2020, Martin Currie received an A+ from the UN’s Principles for Responsible Investment (PRI) across all three pillars (Strategy and Governance, Listed Equity Incorporation, and Active Ownership), for the fourth consecutive year.2 The PRI is a voluntary framework for companies who commit to integrate ESG factors into their investment analysis and decision-making.
ClearBridge Investments, a leader in sustainable investing for more than 30 years, was recently appointed manager of the Franklin ClearBridge International Growth Fund, and its ETF version, Franklin ClearBridge Sustainable International Growth Active ETF (FCSI). Franklin Templeton clients will benefit from ClearBridge’s proprietary ESG research process, and commitment to driving positive change through long-term engagement with companies.
In looking at companies and funds, ESG performance is being incorporated more and more into investment management processes. These are important considerations for all advisors and investors.
Franklin Templeton says part of successful investing is reinforcing sustainable ESG structures, which create the conditions for issuers to succeed. Investment managers and other shareholders must provide strong engagement and demonstrate active ownership.
ESG indicators can also provide material insights not yet captured by the market. Identifying those insights can allow Franklin Templeton to target investments they believe are best positioned to deliver sustainable returns for their clients.
Franklin Templeton has long had strong ESG capabilities, going back many decades to the practices of Sir John Templeton. Now, a key benefit of the Legg Mason acquisition is access to a global network of credible ESG experts in its new investment teams.These capabilities are being made available to Canadian investors through mutual funds and ETFs.
For example, the Franklin Brandywine Global Income Optimiser Fund has ESG analysis embedded into its investment process. The weakest ESG scoring securities may be limited in exposure, or even excluded, from the portfolio of the mutual fund and its ETF version, FBGO.
The portfolio management team behind Franklin Martin Currie Sustainable Emerging Markets Fund, and its ETF version, FSEM, have also earned acclaim for responsible investing.
Adding these teams’ expertise to Franklin Templeton’s ESG framework is a catalyst in bolstering a firm-wide commitment to be responsible stewards of clients’ assets.
Today, over 93% of the company’s assets under management represent strategies that consider ESG factors in the investment process. Assets with a specific focus on ESG total over US$175 billion.3
Helping advisors to succeed
This focus is helping advisors to succeed, says Green.
“Sustainability is top of mind for Canadian investors, so we have to be proactive and nimble in anticipating what advisors and their clients need and responding accordingly,” he says.
To further support advisors throughout the pandemic, Franklin Templeton has provided timely information and analysis from its investment experts amid the volatility and uncertainty. The company has invested in technology and created a flexible structure to ensure we are servicing our clients in the way that makes sense for their business.
Another valuable resource is the Franklin Templeton Academy, which offers advisors a wealth of free online modules. Users can review them 24/7, at their own pace, and earn continuing education credits.
The courses cover everything from ESG investing, exchange-traded funds, and hedge funds, to strengthening your personal brand and social media presence. Whatever the topic, the Franklin Templeton Academy helps users to gain knowledge, improve the efficiency of their practices, build their businesses, and, ultimately, be better advisors for their clients.
“We’ve worked hard to become a closer partner to advisors by offering great solutions and service, effective communication and value-add programs,” says Green. “I want financial advisors to give us a fresh look to see what we can do to help their clients and build their businesses.”
Improved ESG capabilities, new sustainable strategies and stronger communications with advisors are all part of the new era for Franklin Templeton Canada. “This is only the beginning,” says Green.