“We are not trying to compete with trackers; what we are saying is that now, for a little bit more of a fee, you can get very good active management.”
For Rory Maguire, MD at Fundhouse, Franklin Templeton’s move is an interesting one in a world where managed portfolio solutions are playing an ever more important role within the advisory space.
“Lowering the fund cost not only gives the MPS fee leverage it allows the adviser, who is feeling squeezed from all angles, a way to raise his fee without upping the total cost to the client,” he explained.
“You could see a significant response to the market from such a move, especially because this is a genuine boutique within a bigger business.”
This was a point made picked up by both Cockerill and Moeller as well, who pointed to the strong performance by all three funds (all three are first quartile over three years).
“These guys have been running a very tight very successful ship within Franklin Templeton and it represents a significant vote of confidence in their ability to continue to deliver even with narrower margins,” Moeller said.
And that is of course the point, the lower the margins get, the better the performance needs to be if one is going to make a successful fist of an asset management business. Of course, the other argument can be made, that the lower the price, the less valuable the commodity, but that does not look to be the case in this instance.
