Franklin Templeton to purchase Legg Mason

The merger will give the new business more than $1.5 trillion in assets under management.

Funds and Investment Trusts February 18, 2020 by Tom Bailey

In the latest asset management mergers, Franklin Templeton has agreed to purchase Legg Mason for $4.5 billion.

The merger will give the new business more than $1.5 trillion in assets under management.

Both companies are US based asset managers. However, both run several funds and trusts which are popular among UK investors, including Franklin Templeton’s Emerging investment trust, previously managed by star manager Mark Mobius, and Legg Mason’s Japan Equity Fund.

The new company will be under the control of Franklin Templeton’s current chief executive Jenny Johnson. For now, however, there appears to be little risk of either of the fund houses’ funds being closed due to crossover.

In a statement on the decision, Franklin Templeton said Legg Mason and its affiliates will remain autonomous, “ensuring that their investment philosophies, processes and brands remain unchanged”.

Joseph A. Sullivan, chairman and chief executive of Legg Mason, noted: “By preserving the autonomy of each investment organisation, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimising the risk of disruption. Our clients will benefit from a shared vision, strong client-focused cultures, distinct investment capabilities and a broad distribution footprint in this powerful combination.”

The move comes after a string of asset manager takeovers. As we reported yesterday (17 February), Jupiter Asset Management announced that it will take over Merian Global, in a move that would make Jupiter Asset Management the second-biggest fund house in the UK.

Meanwhile, November 2019 saw Premier and Miton merged, while in October of the same year Liontrust purchased the smaller fund house Neptune. There have been other notable fund management mergers over the past couple of years, including Standard Life Aberdeen.

The trend can be traced back to the increased pressure that active management fund houses have faced following the rise of passive investment after the 2008 financial crisis. In a bid to benefit from economies of scale, the number of mergers per year of publicly traded asset managers doubled globally between 2009 and 2018, according to a study from Deloitte Casey Quirk.

 

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