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Franklin Templeton has been named the world’s worst-selling retail fund manager for 2020 after investors pulled almost $50bn from the US group, marking the latest sign that it is struggling to turn round its fortunes. The California-based asset manager has suffered more than half a decade of heavy redemptions, repeatedly holding the crown of the worst-selling investment manager. Clients withdrew a net $48.3bn from Franklin Templeton’s mutual funds last year, according to figures from data provider Morningstar, in a list of worst-selling managers that was dominated by active groups that seek to beat the markets through individual stock selection.
Franklin Templeton’s redemptions occurred despite the group’s efforts in recent years to improve its position, which included naming Jennifer Johnson, a member of the asset manager’s founding family, as chief executive, and then announcing the acquisition of rival asset manager Legg Mason in February. The Morningstar data incorporates open-ended funds, including exchange traded funds but excludes money market products. Franklin Templeton, which oversees almost $1.5tn in assets, said the investment performance of some of its larger strategies “has been under pressure, which has contributed to outflows”.
“This type of underperformance is not abnormal in a momentum-driven market,” it added. One of Franklin Templeton’s best-known portfolio managers, Michael Hasenstab, was among those hardest hit by redemptions after his performance suffered because of a disastrous bet that bond prices would fall. Amin Rajan, chief executive of CreateResearch, an asset management consultancy, said Franklin Templeton once “enjoyed pole position in emerging markets and fixed income” investing, but has struggled in the years since. “Like its active peers, Franklin is now having a root and branch look at every area of operation to retain its relevance in a fast-changing investment landscape,” he said.
“Its acquisition of Legg Mason is meant to be transformational. In the meantime, it remains on the watchlist of many institutional investors.” Franklin Templeton said the specialist investment managers acquired as part of the Legg Mason deal “continue to operate autonomously and their related flows and performance will factor fully into our fiscal year ahead”. It added that it had seen “strong performance and momentum in several key asset classes, most notably in fixed income, US equity and alternatives”. The 2020 numbers include data for both Franklin Templeton and Legg Mason, following the closing of the acquisition in July.
The numbers from Morningstar also show that Capital Group, a prominent active manager, suffered a terrible year in 2020, with investors pulling a net $33bn from its American funds arm. Overall, Capital Group experienced net outflows of almost $27bn last year. Dimensional, Invesco and T Rowe Price were each hit with net retail investor redemptions of at least $26bn.
|Asset manager||Estimated Net Flow ($bn)|
|T Rowe Price||-27|
Tony Thomas, associate director of equity strategies at Morningstar, said: “2020 wasn’t great for active managers. Shops with mostly actively managed offerings dominate the list of firms with the most outflows.” BlackRock, the world’s largest asset manager, topped the list of the best-selling fund managers, amassing almost $260bn in net sales — more than twice its nearest rival, Vanguard. While the worst-selling list was dominated by actively-managed funds, some stockpickers have managed to attract large sums of cash. JPMorgan Asset Management was the third best-selling manager globally last year, drawing in $67.6bn in net inflows. Fidelity, Morgan Stanley, PGIM and Nomura also ranked in the top 10. Ark Financial, a small asset manager that specialises in actively-managed exchange traded funds, drew in more than $20bn on the back of strong fund performance. Several of its ETFs ranked among the best-performing actively-managed equity funds in 2020.
Best-selling fund managers of 2020 Asset manager Estimated Net Flow ($bn) BlackRock 259 Vanguard 108 JPMorgan 68 State Street 29 Fidelity 28