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Concerns About Franklin Templeton Spur a Downgrade

Franklin's Parent rating drops to Neutral.

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Concerns about its investment lineup and firm leadership have caused a downgrade of Franklin Templeton's Parent Pillar rating to Neutral from Positive.

Massive outflows in the past few years have made Franklin an extreme example of the challenges facing active management. Between mid-2014 and early 2016, the firm's assets under management fell by more than one fifth as investors opted for passive strategies, and flagships like  Franklin Income (FKINX) suffered outflows amid poor performance. Franklin responded by cutting 300 personnel worldwide and launching seven exchange-traded funds in the United States, four of which passively track customized benchmarks built using a proprietary multifactor model for each.

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Alec Lucas does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.