Last updated: 10:58 / Monday, 4 October 2021
Through its Canvas platform

Franklin Templeton Acquires O’Shaughnessy AM, a Custom Indexing Provider

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  • The transaction is still subject to customary closing conditions and expected to close in the fourth quarter of 2021
  • The acquisition will serve as an important expansion of Franklin Templeton’s existing strengths in SMA and custom solutions capabilities
  • OSAM’s more than 40 team members are expected to join Franklin Templeton along with all of the necessary intellectual property and investment management processes

Franklin Templeton has announced that it will acquire O’Shaughnessy Asset Management, a custom index provider and quantitative asset management firm. The transaction is still subject to customary closing conditions and expected to close in the fourth quarter of 2021.

In a press release, the asset manager has explained that through this acquisition, it adds to its offerings in the high growth separately managed account (SMA) industry, where it is already one of the largest providers with 130 billion dollars in assets under management as of August 31, 2021. In its view, OSAM’s capabilities, both as a factor-based investment manager and as a Custom Indexing solution via its flagship Canvas® platform, "will serve as an important expansion and enhancement of Franklin Templeton’s existing strengths in SMA and custom solutions capabilities".

The platform was launched in late 2019 and has seen strong growth since its inception, now representing 1.8 billion dollars of OSAM’s total 6.4 billion in assets under management as of August 31, 2021.

Technological advances are reshaping how financial solutions are delivered, and we continue to invest in innovative technology to enhance client outcomes and their experience. Custom Indexing is aligned with our commitment to bringing sophisticated customization to a broader investment audience, and I’m excited to welcome the OSAM team to Franklin Templeton", said Jenny Johnson, President and CEO of the asset manager

Franklin Templeton believes that the transaction will bring "compelling benefits" to the clients that both companies serve across multiple channels. "Custom Indexing represents a significant area of growth in asset management today, and Canvas allows financial advisors to build and manage Custom Indexes in SMAs that are individually tailored to the client’s specific needs, preferences, and objectives", points out the press release.

Besides, they highlight that advisors can create investment templates, access factor investing strategies, utilize passive strategies, and apply ESG investing and SRI screens to adhere specifically to the client’s personal beliefs. Canvas also provides the opportunity for advisors to efficiently plan, set tax budgets, identify realized and unrealized gains and losses, and systematically sell certain positions to create offsets. OSAM is also regarded as a pioneer in factor-based investing with a long history of delivering its investment strategies through SMA and mutual fund solutions.

Patrick O’Shaughnessy, CFA, Chief Executive Officer of OSAM said that Custom Indexing represents the next progression of investing through Indexing, ETFs, and Direct Indexing. “As part of Franklin Templeton, we’ll have the opportunity to accelerate client growth at Canvas and continue to add to existing OSAM offerings. We’re excited by the incredible potential this acquisition creates and look forward to getting started", he added.

Through this transaction, OSAM’s more than 40 team members are expected to join Franklin Templeton along with all of the necessary intellectual property, investment management processes, and principal business assets necessary to evolve and grow the business within the Franklin Templeton Product Solutions group.

Roger Paradiso, Head of Franklin Templeton Product Solutions claimed that they "firmly believe" winning solutions will need to combine a quantitative skillset, active investment management expertise, and a great digital user experience. “This partnership will further enhance Franklin Templeton’s ability to deliver compelling individualized SMA solutions to clients, advisors and firms while continuously innovating to advance and shape the managed accounts industry", he concluded.

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