Franklin Templeton is “very focused on the alternatives markets,” according to the company’s CEO, Jenny Johnson. In an interview with Leslie Picker at CNBC’s “Delivering Alpha” newsletter, Johnson explained that the firm’s acquisition strategy “is to really find products that fill in particular product niches that we needed to have.” In this case, that’s alts.
“Now, we are very focused on the alternatives markets,” Johnson said. “They project that about 15% or 16% of the assets in the next couple of years in the asset management business will come from alternatives, but yet 46% of revenues. So, it’s an important place for us to be and today.”
The challenge, however, according to Johnson, is that “you need global products.”
“So, if you have, for example, a real estate manager that’s just focused on the U.S., it’s hard to sell that in Europe. So, if there’s product gaps we’ll fill in,” Johnson explained.
Franklin Templeton currently has $210 billion in alternatives assets.
Looking forward, Johnson noted that the number of public equities has dropped from about 6,500 in 2000 to 3,300 now. Meanwhile, the number of private equity-backed companies has gone from about 1,700 to 8,500 during the same period.
“So, just from an investable universe, it’s really, really important to be able to have access to alternatives and I don’t think that trend changes,” said Johnson, adding that “companies are waiting much longer to go public, which means much of that growth opportunity in those early years is only captured in the private markets.”
Johnson added that since alternatives are “very illiquid, so you have to responsibly figure out how you’re going to deliver those to the alternatives channel.”
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