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Making the Franklin Mega-Merger Work for Fund Investors

Let's make a fund deal.

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When I heard about Franklin Resources' acquisition of Legg Mason (LM), my first thought was that it makes sense for a firm that is suffering the most outflows of any firm. My second thought was, "I hope it does a better job than it did with Templeton and Mutual Series."

Those deals were back in the 1990s, so most of the decision-makers at Franklin (BEN) will have changed since then. The deals were good for corporate shareholders, but Franklin raised fees and watched a steady stream of talented investors leave both firms. The two were among the elite in their asset specialties, but now most of the legacy Templeton funds have Morningstar Analyst Ratings of Neutral, and the legacy Mutual Series funds are rated Bronze.

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Russel Kinnel has a position in the following securities mentioned above: RYSEX. Find out about Morningstar’s editorial policies.