Changes, Changes and More Changes at Templeton

The Templeton Growth Fund has been the flagship product at Templeton for many years. Not only does it have one of the longest track records in the mutual fund industry, but it is also one of the most recognized household names.

Currently the fund has over $10 billion in assets which makes it the largest fund in Canada. Since 1954, the fund has been managed with the same disciplines handed down by the well-recognized Sir John Templeton, who now devotes his life to philanthropic causes.

More recently the Templeton organization has experienced some difficult times as their longstanding investment philosophies and styles have gone ‘out of favour’ and the company has experienced severe redemptions from investors.

Change is inevitable

Templeton has made some very significant changes for the better to adapt to the ‘new’ thinking in the markets. There have always been disciplines and styles and the two most common have been growth and value. However, with the increased complexity in the mutual fund industry, we have seen new styles emerge. Coupled with the fact that investors are less patient in the ‘now’ society, investors demand results and they demand them now. Let’s look at some of the changes that have occurred:

  1. A New Corporate IdentityIn November 2000, Templeton re-branded their organization to Franklin Templeton Investments Corp. to reflect the name of their parent company Franklin and to incorporate the ‘new’ diversity of their product line.

    Don Reed, President and CEO of Franklin Templeton Investments says, “We are not simply changing our name; we’re adopting the global Franklin Templeton Investments brand, one of the most recognized and respected financial brands in the world. Along with that brand name comes a continued commitment to disciplined, proprietary investment management and the added dimension of greater depth and breadth in investment styles – in short, true choice.”

  2. More FundsSurprise, surprise, Franklin Templeton, along with every other mutual fund company, has added many new products. In particular, there are six new Franklin Funds with a growth style management to complement the value style Templeton Funds. Templeton, also launched a new line up of RRSP eligible products that are clones of some of their well known global products.
  3. The Acquisition of Bissett Investment ManagementFranklin Templeton Investments closed the acquisition of Bissett & Associates Investment Management in October 2000. Operationally the two organizations are now fully integrated and Bissett funds are now available through financial advisors across Canada. Bissett’s investment management team remains independent and able to continue to practice their investment management style.
  4. Portfolio Management Changes to the Templeton Growth Fund.Mark Holewesko has been the lead manger of the growth fund since 1985. After 15 years of managing this flagship fund, Holowesko has moved within the Templeton organization to take on some new responsibilities. In July 2000, Sean Farrington took over as the lead manager of the fund. This week, it was announced that Sean would be moving to continue working with Mark in his new role and George Morgan was appointed as the new lead manager of the fund.

Cause for concern?

In my opinion, the changes in fund managers are not too concerning. Templeton is one of the firms in Canada that truly does practice a team approach. According to Morgan in a conference call, he says “the fund will have the same process, the same analysts, the same holdings but just a different figurehead.” Templeton employs a team approach where every manager relies on a team of sector and country analysts to develop the famous Templeton ‘buy list’.

The fact that Holowesko and Farrington have not left the organization to go to competitors is comforting. They have simply moved on to different responsibilities – something common to any big organization. I believe the team approach does exist in the Templeton organization and figureheads or star managers are less of an issue.

The bottom line

Change is inevitable, and this is especially true in the financial industry. Mergers, acquisitions, new products, management changes are all part of everyday life in the industry.

As an investor it is important to be aware of changes in funds and products that you own. Don’t make impulsive decisions. Take the time to understand why the changes have occurred and whether they are negative or positive.

In the case of Templeton, I think most of the changes are positive and, quite frankly, necessary. These changes are not new to the industry and Templeton has taken some big steps to catch up to some of its competitors.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace.For more information you can follow him on Twitter @JimYih or visit his other websites JimYih.com and Clearpoint Benefit Solutions.

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