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Franklin Templeton Thoughts: Addressing Undiversified Risk

When diversification is a core principle for successful investing, what stops women from offering their talents in finance and investment careers? Katrina Dudley, Investment Strategist for Franklin Mutual Series, and Stephen Dover, Chief Market Strategist and Head of Franklin Templeton Investment Institute, discuss diversification risks and Dudley’s and Ellen Carr’s new book, Undiversified: The Big Gender Short in Investment Management.

When diversification is a core principle for successful investing, what stops women from offering their talents for finance and investment careers? I discussed gender-based investment risks with Katrina Dudley, Investment Strategist and Portfolio Manager for Franklin Mutual Series. In Dudley’s and Ellen Carr’s new book, Undiversified: The Big Gender Short in Investment Management, they research and provide solutions for these risks to close gender gaps in investment, finance, and in many careers:

  • Many asset managers have not diversified their workforce positions, yet portfolio management requires diversification. Access to benefits from workforce diversification can improve portfolio resiliency and returns while mitigating risk.
  • We need to retain and promote women. We must resolve gender-based pay inequalities and the slower promotion rates of women. When workers apply their home-life constructs (e.g., housewife or stay-at-home mother) onto coworkers, they create biases. As managers watch for net present values (NPV) in portfolios, they should also watch for NPVs of their female peers’ careers to avoid gender-based wage and promotion disparities.
  • Undergraduates across US universities surveyed on investment and finance careers responded that a big barrier to investment and finance careers is that females are not aware of careers in investment management. Male undergraduates are 58% more likely than their female peers to consider a career in investment management.
  • The four pillars that add diversification to finance as well as most industries:
    • Challenge investment and asset management firms to turn their data-analytics lenses inwards, use diversification fundamentals, and equalise promotions.
    • Mentor and sponsor women in meaningful ways, such as introducing women colleagues to established work networks.
    • Expand influencers at work or in education to include women. Engage more women professors, women guest speakers, and women as business leaders.
    • Capital allocators can invest with managers that diversify at both portfolio and analyst levels.

When companies address diversity risk and gender gaps, they innovate their decision-making, influence better decisions to beat benchmarks, mitigate all risk types, and are better community contributors.



Franklin Templeton Key risks & Disclaimers:

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This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as of publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

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What are the risks?

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future results. Actively managed strategies could experience losses if the investment manager’s judgment about markets, interest rates or the attractiveness, relative values, liquidity or potential appreciation of particular investments made for a portfolio, proves to be incorrect. There can be no guarantee that an investment manager’s investment techniques or decisions will produce the desired results. Diversification does not guarantee profit or protect against risk of loss.



MeDirect Disclaimers:

This information has been accurately reproduced, as received from Franklin Templeton Investment Management Limited (FTIML). No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

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