Dave Donahoo, Head of US Wealth Management Alternatives at Franklin Templeton, joined Keith Black, Managing Director of RIA Channel, at the CAIS Summit, to discuss the journey to become a leading alternative investment management firm.
Franklin Templeton, a pioneer in mutual funds, started democratizing investing 80 years ago. Franklin Templeton is now making it easier for RIAs and their clients to access alternative investments.
Franklin Templeton’s alternative investment journey started ten years ago by acquiring the K2 hedge fund organization and accelerated in 2018 with the acquisition of Benefit Street Partners, a private credit firm. Since 2020, Franklin Templeton added capabilities in real estate, secondaries, and co-investments. Today, Franklin Templeton is one of the world’s top ten alternative investment managers with around $260 billion AUM.
Donahoo notes that three main things are needed to deliver private markets into the private wealth channel. First, Franklin Templeton believes in a specialized investment manager approach, as no single manager can do all things well. The firm acquired managers with a narrow scope and a deep expertise. Second, each of the acquired firms had an established base of institutional investors, but not much in the way of individual investors. Donahoo heads the US private markets distribution team that works with the specialized managers to build relationships in the private wealth market. Third, Franklin Templeton works to educate RIAs on how and where to use alternatives in client portfolios.
Franklin Templeton’s alternative investments thought leadership, headed by Tony Davidow, CIMA, has won multiple “Wealthie” awards. The Alternatives by Franklin Templeton Knowledge Hub provides advisors with an advanced understanding of the alternatives markets while providing courses that earn CE credits.
Historically, alternatives were primarily offered in drawdown funds to qualified purchasers. Today, alternative investment vehicles are undergoing a manufacturing revolution that increases access for private wealth clients. New product launches are typically evergreen, semi-liquid funds such as interval funds, tender offer funds, and non-traded funds. Franklin Templeton will not launch an evergreen fund if it is likely to dilute the skill the manager has displayed in their institutional vehicles. Once it has been decided to launch an evergreen vehicle, the team seeks operational alpha with the best vehicle structure for each asset class and strategy.
WEBCAST – 2025 Private Markets Outlook: Challenges and Opportunities
This webinar identifies challenges and opportunities within private markets in the coming years. We have seen valuations reset from their lofty 2021 levels, and we have moved from an environment of rising interest rates and high inflation to an environment where the Fed has begun cutting rates and inflation has come down substantially. We believe that private markets represent an attractive set of opportunities for investors, and will explore private equity secondaries, private real estate, and real estate debt in greater detail with industry experts.
Accepted for 1 CFP® / IWI / CFA CE Credit