Franklin's Johnson on Q2 Call, Benji
Franklin Resources, manager of the Western Asset and Putnam funds, also released W2'25 earnings and hosted its latest earnings call last week. President & CEO Jenny Johnson comments, "Money market balances have continued to grow as the Federal Reserve holds the target overnight rate at about 4%. We've had cash management net inflows for 4 out of the 5 last quarters, with $2.7 billion in each of the last 2 quarters, increasing our cash management AUM to $72 billion.... This quarter, we launched an intraday yield feature on Benji, our tokenized money market fund, making investing faster more transparent and accessible 24/7. This is another example of how Franklin Templeton has always been at the forefront of change, whether it's providing investors with access to new investment opportunities improving how they manage their money or leveraging new technology to make it more efficient." During the Q&A, she says, "We think that it will fundamentally change the rails of the financial system. So why do we think that? Let me just use our tokenized money market fund as an example. So we launched this in 2021. We are still the only asset manager in the world who provides digitally native exposure on-chain as opposed to shadowing ... from your old system shadowing onto the blockchain. That gives us a lot of additional capability that enhances what we can do for clients with that single product." Johnson explains, "So we just launched intraday yield. If you hold our Benji money market fund, you will see what you earned that day, and it will be posted to your account that same day. if you use the Benji product as collateral and you only hold it for 4 hours and 32 minutes, you're going to get 4 hours and 32 minutes of yield. So it's really because blockchain is so efficient that it enables those enhanced services. When we say, and when the SEC approved that product, they had us run [a parallel process], and we're still running the transfer agency in-house.... And we were astonished even by the difference in cost to actually run transactions on chain versus on the old transfer agency system." Johnson adds, "So we've built an ecosystem in there. As I mentioned on the Benji platform, we actually got a patent on our wallet. Right now, you download it from the Apple Store, but we really have designed it because we think it could be white labeled by others. And right now, that wallet ... and the Benji app or the Benji token can operate actually across chain on 8 different blockchains. So as the traditional distributors start to think about how they have to deal with the crypto world and the tokenization world, they're going to look for partners. We think that will help them to navigate it, and we've built this infrastructure to do it. So that's how we're thinking about translate." Finally, she says, "Now today, we actually manage reserves for 4 stablecoin providers. Everybody is aware of Circle and USDC because it's the big elephant in the room. But there are actually other ones. We were just selected by the first state who is issuing their own stablecoin to manage that stablecoin. So today, there's been kind of a parallel world between the crypto world and the traditional finance world. Now as you get clarity around regulation like the Genius Act, you're starting to see firms be more comfortable being able to dip their toe into it. And that's where we think we can be a really important partner because, again, this -- the infrastructure that we've built, we've been building since, I think, 2018 is -- it's not going to be an easy one for people to catch up quickly. And so our ability to really private label that and have it integrated in others -- in their client platforms. Just imagine if you're a distributor, you've got your clients who are holding their crypto assets, some portion of them, probably the younger ones, are holding their assets over at Coinbase. Wouldn't you like to be able to move that over into a wallet that's integrated on your system so you can provide an entire view of the clients' investment opportunities, and that's the kind of infrastructure that we've built."
