Having a star fund manager is an easy way for an asset management firm to attract client money. But for Franklin Resources’s chief executive officer, it’s not worth the disruption when they leave.
“Clients get nervous by a star manager, if you appoint one, because then it becomes a succession issue,” Jenny Johnson said.
Franklin should know. The firm’s Franklin Templeton fund business was once synonymous with Mark Mobius, the investment guru who introduced emerging markets to a generation of investors. Mobius retired from Templeton in 2018 only to start his own firm a few months later. But, said Johnson, it’s rarely about one person making all the investment decisions. “The reality is they were always supported by a large team.”
And it’s not just at Franklin, which was founded by Johnson’s grandfather in New York in 1947. The difficulty of outperforming the market consistently over a long period of time, compounded by the rise of low-cost index funds, has left few managers in today’s mutual fund industry whose status ranks with one-time giants such as Peter Lynch at Fidelity Investments, Bill Gross at Pimco, or Bill Miller at Legg Mason. In a sign of the times, Miller left Legg in 2016 to start a hedge fund and his former firm was bought by Franklin earlier this year.