Jenny Johnson
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Sourcery · Franklin Templeton CEO on SpaceX, Anthropic, Circular Deals & the…
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Why Is Franklin Templeton Investing in SpaceX and Anthropic?
Jenny Johnson says Franklin Templeton invests in SpaceX and Anthropic through late-stage venture, because companies wait much longer to go public and the IPO kickers that used to lift performance are gone.
She confirms the SpaceX exposure. When Molly O'Shea names Anthropic and a bunch of other companies, she agrees. Late-stage venture is what IPO underwriting used to be. A mutual fund or an ETF can hold up to 15% in illiquid assets. Franklin Templeton does not tend to run that allocation at 15%, because a market move could breach the limit, and a 6%, 7%, or 8% stake can fit. Clients who saw the deals asked for a fund, so the firm now has a venture group that often invests both through the v
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Is AI in a Bubble?
Jenny Johnson says AI feels frothy in some areas, and she would not finance data centers long term because that bet assumes today's chip manufacturing and energy production stay in place for the next 20 or 30 years.
Molly O'Shea brought up Ken Griffin's point from the Citadel Securities Conference: nobody knows chip supply and demand, including when the chips being made now will expire. Johnson remembers a Gartner curve she could not name exactly. New technology gets called the greatest thing ever, runs all the way up, then crashes when people are disillusioned, and later settles where it should. The question is where AI sits on that curve. Demand makes people innovate, so assuming today's
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What Is the Minimum for Franklin Templeton's Tokenized Fund?
Jenny Johnson says the first natively on-chain tokenized money market fund the SEC approved can open an account for $20, while a traditional Franklin Templeton money market fund needs $500. Anything below $500 means the other shareholders subsidize the servicing fees. On the blockchain system the minimum can probably go down to $5.
The SEC had the firm parallel process the fund on the old transfer agency system, the old shareholder record keeping system, and the blockchain system. Johnson thinks only two firms were still running the old system in-house. Side by side, the on-chain version was far more cost-effective. The tokenized money market fund calculates interest every second. A hedge f
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How Did Franklin Templeton Grow Putnam's Assets?
Jenny Johnson says Franklin took Putnam's equity team, or the total assets there, from about 136 billion to over 220 billion by bringing a high-performing team onto platforms Putnam was too subscale to join. Putnam had great performance. The problem was size.
Great West Life wanted Franklin stock. Great West Life had realized managers need to be a big-scale manager to get on platforms and could see the consolidation. The seller was looking to diversify, wanted to hold stock in an asset management company, and wanted to own a broader asset manager instead of having just Putnam. In most cases Franklin paid cash, maybe cash with debt. The Putnam deal was done with a bunch of Franklin stock.
P
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How Big Is Franklin Templeton's Canvas App?
Jenny Johnson says the Canvas application was about two and a half billion when acquired and is now 30 billion, probably four years later.
Lexington has more than doubled since the acquisition. Clarion Partners, the real estate manager, has more than doubled. BSP was 26 billion at the purchase. After a couple of other acquisitions, private credit is just under 100 billion.
A lot of people are skeptical that a traditional asset manager can fit culturally with private markets teams, because compensation structures differ. The fit has worked really well. Wealth-channel expertise has helped the expansion, because a wealth sale is very different from an institutional sale.
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How Early Did Franklin Templeton Close Legg Mason?
Jenny Johnson closed Franklin's deal for Legg Mason 60 days early. She never lost faith that it was the right deal, and it turned out to be an amazing deal for Franklin.
Franklin was 75% retail wealth channel and 25% institutional, and Legg Mason was exactly the opposite, so the firms became 50% institutional clients and 50% wealth clients. The mix balances the business better, and the deal got Franklin into private markets. It was announced about five days after she became CEO, following a year of work. Three weeks later everything locked down with COVID, and the market tanked. Some articles said poor Franklin could not get out. A good strategic fit rolls through the ups and downs. Asset m
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Why Did Franklin Templeton Start Late-stage Venture?
Jenny Johnson says Franklin Templeton started late-stage venture because companies wait much longer to go public, so portfolio managers lost the IPO kickers that used to lift performance. Late-stage venture is what used to be underwriting at the IPO.
Franklin Templeton is headquartered in Silicon Valley and has a growth equity team there. A mutual fund or an ETF can hold up to 15% in illiquid assets. The firm does not tend to run the allocation at 15%, because a market move could breach the limit. A 6%, 7%, or 8% holding can fit. The firm began buying late-stage venture deals. Clients who saw the deals asked for a fund. Franklin Templeton now has a venture group. The group often invests in
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Why Will Interest Rates Stay Higher?
Jenny Johnson thinks inflation is probably pretty sticky and rates are probably going to stay higher, after setting aside noise around AI, hyperscalers, circular financing, and revenue recognition. The current rate level is not unusual from a historical standpoint. It is unusual for the last 25 years, but in longer history it is not unusual. Mortgages used to be much more expensive, and the economy still functioned. The rate environment is definitely higher, so a business model with a lot of leverage is a concern. For a good cash flowing company, the consumer is still very strong, particularly in the US.
Productivity is up, at 2%. She does not think any of the productivity story has anythin