Franklin Templeton CEO Johnson on Active Versus Passive Management

The video discusses the importance of active management in volatile markets, comparing it with passive strategies. It highlights the role of equity and fixed income perspectives, the significance of biotech and fundamental analysis, and the impact of COVID-19 on investment strategies. The discussion also covers the balance between human judgment and technology in investment decisions and predicts future trends in active and passive management, emphasizing the importance of ESG considerations.

What is a key challenge for active managers in momentum markets?

• Focusing on short-term gains

• Ignoring sector bets

• Overweighting small-cap stocks

• Underweighting dominant stocks

What is a limitation of passive fixed income strategies according to the speaker?

• They are too diversified

• They focus too much on short-term gains

• They require constant rebalancing

• They increase exposure when companies take on more debt

How does the speaker suggest investment strategies should evolve?

• Rely solely on human intuition

• Depend entirely on machine algorithms

• Combine human insight with data

• Focus on short-term market trends

What does the speaker identify as a critical factor for successful investment strategies?

• Deep understanding of market regulations

• High-frequency trading

• Avoiding technology in decision-making

• Exclusive reliance on historical data

What is a potential benefit of active management in the next decade?

• Better handling of supply chain issues

• Increased market volatility

• Reduced need for ESG considerations

• Higher fees for investors