Active management is gaining momentum and gaining market share over its passive counterparts, leading investors to wonder if there are certain situations in which they should turn to higher cost active funds to achieve outperformance.
Jenny Johnson, President and CEO of Franklin Templetonsat down with Julie Hyman, presenter for Yahoo FinanceToday at Exchange: an ETF experience to discuss Franklin Templeton’s experience as an active and passive ETF manager.
“[Active ETFs make up] 4% of assets but 12% of flows,” Johnson said. “So I think people are starting to recognize that we’ve had 12 years of massive central bank intervention where money is basically printed there.”
“When interest rates were zero, where were you going to put your money? Johnson asked the audience. “You put [it] on the stock markets. »
Johnson said that in the economic environment of the past few years, all boats are floating.
“We all know that in dynamic markets, liabilities tend to do better,” Johnson said. “Now in this environment of rising rates, inflation, supply chain and demanding questions, potentially stagflation, is where we need to be active.
Johnson said the current — and future — economic climate calls for active management, making this a real opportunity for assets to shine.
Franklin Templeton, however, has a wide range of passive and active funds available to investors.
“We want to be either the building blocks or the end solution, depending on the customer’s needs,” Johnson said. “We just want to give customers options.”
Johnson cited emerging markets as an example, where active management often outperforms its passive fund counterparts.
“But if you’re just trying to get some quick exposure, especially for people who tend to invest in the macro, a fast country passive ETF is a great solution for that,” Johnson said.
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