This week, for our special 500th episode with a master’s degree in business, I speak with Jenny Johnson, president and CEO of the Franklin Templeton. Johnson joined the company in 1988 and held leadership positions in all of its major divisions before becoming CEO in February 2020. She also led the landmark acquisition of Legg Mason in 2020 and Putnam in 2023, the organization now managing over $1.5 trillion globally. Among many other accolades, she has been named to Barron’s list of the 100 Most Powerful Women in American Finance for three consecutive years, most recently in 2022.
She started at Drexel Burnam, getting her feet wet in apprenticeship operations as a very junior employee. When she returned to Franklin Templeton, she rotated through various divisions including investment management, distribution, technology, operations and high net worth.
There is a history of acquisitions at FT, dating back to the October 1992 acquisition of Templeton, Galbraith and Hansberger for $913 million. (This led to the company’s current name from its former “Franklin”). The arrival of mutual fund pioneers Sir John Templeton + John Galbraith led to a critical mass within the company.
Johnson has since led several acquisitions, including the 2020 all-cash deal for Legg Mason valued at $4.5 billion; Last year, FT bought O’Shaugnessy Asset Management, including its Canvas breakout direct indexing product, for an undisclosed sum; this year, FT bought Putnam for $925 million. Each of the acquisitions filled a hole in Franklyn’s product suite. The company continues to expand, seeking greater growth overseas, particularly in India and the Middle East.
We also discussed active management versus indexing:
“If you’re an active manager, your job is to have a diversified portfolio and think about risk-adjusted returns. When you have a buoyant market (like now) and you have five companies taking their 25% off the index, a professional manager gets nervous about that kind of concentration, say the S&P 500. There aren’t enough discussions of how the market risk of the index changes based on (a few stocks). The day Tesla was added to the S&P 500, it became a much riskier investment based on volatility and concentration. In these types of markets, it is difficult for an active manager.
A list of his favorite books is here; A transcript of our conversation is available here Tuesday.
You can stream and download our full conversation, including all podcast extras, at Apple podcast, Spotify, embroiderer, Google, YoutubeAnd Bloomberg. All of our previous podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Tom Wagner, Co-Portfolio Manager at Capital of Knighthead. The $10 billion event company is a value-oriented investor specializing in companies in need of financial and operational restructuring. He is a co-investor with soccer legend Tom Brady in several sporting assets, including a pickleball team, Birmingham City F.C. in the English Football League and an endurance motor racing team. Wagner began his career as a hedge fund accountant at Ernst & Young.
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