Competitiveness of Franklin Templeton Fund Managers: Do the Fund Managers Exceed the Benchmark?

• Main Authors: Zuzana Hajduova, Miroslav Klimek, Naqibullah Daneshjo, Olha Prokopenko
• Format: Article
• Language: English
• Published: Tomas Bata University in Zlín 2019-09-01
• Series: Journal of Competitiveness
• Subjects: mutual funds; investments; portfolio; earnings; competitiveness; portfolio managers
• Online Access: https://www.cjournal.cz/files/336.pdf

Franklin Templeton Investments is a worldwide asset management company that provides services to clients in more than 170 countries. Unlike investment funds, mutual funds do not have legal personality, therefore they are merely baskets that associate assets. High past equity returns are not a guarantee of future earnings. Individual funds are often praised for the positive results they have achieved in the past, but even experienced portfolio managers cannot guarantee future returns despite their past successes in the market. The main purpose of this paper is to compare the competitiveness of Franklin Templeton fund managers. Among the time-tested indicators and suitable markers for our research on the validation of an active mutual fund with its benchmark index, the information ratio and sharp ratio have been included in the present study. Recent studies suggest that fund managers cannot achieve better results than those set in their benchmark. Managers do not utilize a simple set-up with a given portfolio, and thus their competitiveness would seem to compare unfavorably to results achieved by so-called passive investment. It can be noted that over the course of 15 years, the longest single time period that was analyzed, out of 22 equity funds, only four sets of results exceeded the benchmark. However, if regular fees are also taken into consideration to reflect more pragmatically the benefits for the investor, none of the funds analyzed in the present study failed to overcome the set benchmark during this period.