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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: We're standing by with Franklin Templeton President and CEO Jenny Johnson, and.

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Speaker 3: You know what.

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Speaker 2: It's at Jenny john on the sidelines there.

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Speaker 1: Everybody's here. Everybody is here.

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Speaker 2: And the reality too is everyone is talking about what's

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Speaker 2: going on in the United States right now with the

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Speaker 2: president's tariff plan. How do you see things playing out

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Speaker 2: and what do you think is being underappreciated by investors

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Speaker 2: right now?

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Speaker 3: Well, I think, first of all, I think Veston is

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Speaker 3: doing a better job at describing this as interlocking engine. Right.

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Speaker 3: It's it's tariffs, it's it's taxes, and its deregulation. And

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Speaker 3: I think that that you know, you got to remember

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Speaker 3: in the US you sort of have eighteen months when

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Speaker 3: you get in.

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Speaker 1: To make big changes. Otherwise, in the.

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Speaker 3: You know, Congress is like to flip, but he's not

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Speaker 3: going to get things passed. Right. So if you think

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Speaker 3: about this, the first thing, does he hits tariffs?

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Speaker 1: I think he's working through to get his tax cuts.

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Speaker 3: And remember this is really a tax extension with some

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Speaker 3: additional tax cuts. If we don't get the tax extension,

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Speaker 3: it's a massive tax increase, which then becomes an economic problem. Right,

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Speaker 3: he needs to pay for that, So how does he

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Speaker 3: pay for it? He pays for it by tariffs.

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Speaker 1: So when he first.

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Speaker 3: Came out with the tarifts, he says that's a six

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Speaker 3: hundred billion dollar revenue increase. Today you get about eighty

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Speaker 3: billion dollars from terriffs. Now, whether it's six hundred and

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Speaker 3: four or whatever, he needs four hundred billion to four

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Speaker 3: or fifty billion a year to get to pay for

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Speaker 3: his tax cuts.

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Speaker 1: There is tax extensions, so terrafs is a great way

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Speaker 1: to do it.

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Speaker 3: That's the interlacking nature of this, And when we think

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Speaker 3: about from an economic standpoint, the deregulation is really important,

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Speaker 3: especially as a business. You know, somebody running a global business,

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Speaker 3: and so I think that's the plan. The problem is

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Speaker 3: it's messy because you have to do it all quickly

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Speaker 3: in this sortain eighteen months.

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Speaker 4: There's also an issue too when it comes to tax

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Speaker 4: cuts and other types of more pro growth policies. Is

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Speaker 4: that going to run into issues with concerns about our

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Speaker 4: budget deficit. We had the budget director on yesterday and

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Speaker 4: there's been a lot.

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Speaker 1: Of talk as.

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Speaker 4: To how much can you really afford to do right now?

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Speaker 4: You have one hundred and twenty percent debt to GDP

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Speaker 4: ratio and other metrics that are also eight historical norms.

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Speaker 3: Listen, there's no question that you know what has happened

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Speaker 3: with a deficit in time.

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Speaker 1: You want to be able to take.

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Speaker 3: On to add additional deficits during bad economic times. We've

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Speaker 3: done it during good economic times, which means you have

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Speaker 3: nothing to be able, no leverage if things turned into

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Speaker 3: a recession. So that's a difficult point. But again, as

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Speaker 3: long as he pays for it. How is he going

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Speaker 3: to pay for it. He's going to pay for from

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Speaker 3: changing tax revenues of eighty billion dollars a year from

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Speaker 3: tariffs to four hundred and eighty or you know, five

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Speaker 3: hundred billion, and so as long as it's paid.

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Speaker 1: For it, that's less of a problem.

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Speaker 3: And then, of course, you know, the other part of

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Speaker 3: his plan is government efficiency, right, so to be able

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Speaker 3: to reduce the deficit, that's going to be important. We

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Speaker 3: are on a you know, one point eight of two

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Speaker 3: million dollars a year in additional debt that is not sustainable.

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Speaker 2: I mentioned throughout the course of this conference that that

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Speaker 2: pat is concerning the bond market.

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Speaker 1: Today. You have a ten year.

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Speaker 2: Yield that has been drifting higher in the last couple

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Speaker 2: of days. Despite the palm that the Treasury Secretary seems

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Speaker 2: to be providing to the market, the bond market's not

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Speaker 2: quite showing it.

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Speaker 1: So what does this mean. Do you believe that.

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Speaker 2: The bond market risks a tantrum if the US financial

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Speaker 2: situation is not figuring out.

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Speaker 1: I don't know if it's a tantrum, but I do think.

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Speaker 3: Look, we've you know, our view is you probably get

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Speaker 3: a only one cut this year. But I also think

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Speaker 3: you have to be realistic on the ten year. I mean,

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Speaker 3: I don't think it'd be surprising to have the tenure

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Speaker 3: like four seventy five at the end of the year.

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Speaker 3: Why you have to buy you have to buyers of

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Speaker 3: our debt. The economy is still pretty strong. Ism numbers

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Speaker 3: came in today, you know. I mean a lot of

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Speaker 3: people said, oh, we had this recession. Well we had

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Speaker 3: a recession number because GDP imports people accelerated them.

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Speaker 1: That's the sort of a false signal.

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Speaker 3: I think. So, you know, the economy still feels pretty robust. Now,

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Speaker 3: that doesn't mean that we aren't at a really important

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Speaker 3: moment where there's no question.

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Speaker 1: Businesses are hesitating.

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Speaker 3: They're hesitating in CAPEC spend because they're concerned about what

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Speaker 3: these tariffs mean to us, and they can without certainty,

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Speaker 3: they can't spend.

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Speaker 1: If that goes on for too long, you will risk

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Speaker 1: triggering a recession.

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Speaker 4: Are your investors hesitating at all?

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Speaker 1: Are they worried right now?

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Speaker 3: You? So, First of all, most institutions are long term, right,

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Speaker 3: and so they're not gonna deal.

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Speaker 1: They're not going to.

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Speaker 3: Make switches because of tactical shifts. They're waiting to see

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Speaker 3: what's going to happen here, right, I mean because any

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Speaker 3: day it kind of you know, jumps up and down.

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Speaker 3: So that's I think most of them are viewing this

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Speaker 3: as all right, we're gonna wait and see. You did

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Speaker 3: European investors pulled back a little bit from the US.

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Speaker 1: A lot of people said, well, is that because they're

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Speaker 1: annoyed with the US?

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Speaker 2: No.

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Speaker 1: I think it's because they realize that.

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Speaker 3: There are opportunities in Europe defense spending, other areas. And

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Speaker 3: it was the best performing index today. So again, I

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Speaker 3: think most institutional investors and I and actually because we

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Speaker 3: sell through the wealth channel through financial advisors, they tend

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Speaker 3: to be more sort of long term in their thinking

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Speaker 3: and say, listen, if you missed it at the start,

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Speaker 3: there's no point in making those shifts now because it

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Speaker 3: changes every.

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Speaker 2: Day because you also operate through the wealth channel. I'm

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Speaker 2: really curious about your view on what's happening in private

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Speaker 2: markets right now. Also, since we've been here, we've had

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Speaker 2: a huge range of views. We've had private asset editors say,

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Speaker 2: don't worry about it, everything's fine, the marks are all good,

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Speaker 2: and then we've had others say there's a lot more

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Speaker 2: trouble under the surface.

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Speaker 1: Where do you.

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Speaker 2: Stand on that spectrum and how do you consider this

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Speaker 2: moment where so many asset managers are opening up to

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Speaker 2: wealth clients for an asset class.

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Speaker 1: That's not as in follow exactly No, So, I mean

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Speaker 1: it's interesting.

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Speaker 3: Look, first of all, fundamentally believe that it is important

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Speaker 3: that we open up the private markets to the wealth

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Speaker 3: channel responsibly, right. I mean, there's a big difference between

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Speaker 3: a pension fund who knows exactly what their cash flow

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Speaker 3: liabilities are for the next thirty years making a commitment

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Speaker 3: to saying I want to put thirty percent or forty

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Speaker 3: percent in private markets, and an individual who may have

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Speaker 3: one year or two years of expenses and savings and

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Speaker 3: locking up those assets.

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Speaker 1: So education is really important. The type of vehicles are

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Speaker 1: really important. We're working. I love the idea of retirement.

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Speaker 3: Plans because there's always cash flows coming in, right, people

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Speaker 3: don't tend to stop their payroll contributions and putting kind

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Speaker 3: of a managed account solution which is dealing with the

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Speaker 3: illiquidity risk. But the liquidity risk is very real and

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Speaker 3: it's permanent capital. So in times of stress, people don't

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Speaker 3: you don't get the same pressure the stock market gets,

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Speaker 3: will use it as their liquid So what do you

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Speaker 3: think of.

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Speaker 4: Some of these new products kind of ETFs and similar

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Speaker 4: types of products that are effectively putting private assets in

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Speaker 4: there but with the mix of public assets to try

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Speaker 4: to address some of those liquidity concerns.

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Speaker 3: So Franklin Templeton actually in some of our growth products

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Speaker 3: because we're headquartered in Silicon Valley. I mean, honestly, our team,

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Speaker 3: our growth equity team that was there saying, gosh, we're

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Speaker 3: missing these IPO performance kickers that we used to get

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Speaker 3: because companies are waiting so long to go public and

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Speaker 3: so we actually for the last decade have put late

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Speaker 3: stage venture into some of our growth equity mutual funds.

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Speaker 1: You can do that up to fifteen percent of the

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Speaker 1: mutual fund.

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Speaker 3: So again, as long as you know your product and

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Speaker 3: you know what your commitment is as far as the liquidity,

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Speaker 3: then that doesn't concern me. What concerns me is when

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Speaker 3: people start to convince themselves that these things are more

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Speaker 3: liquid than they really are, because they're not liquid.

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Speaker 2: Now, Jenny, I love a business update from you as well.

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Speaker 2: Of course you've been navigating trouble out the west an

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Speaker 2: asset management unit. What's outdating, what's the latest on what's

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Speaker 2: going on and how Franklin tumbltin is turning past that page?

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Speaker 1: Yeah, so you know, we're working through it.

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Speaker 3: There's obviously been a change in administration, so as you

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Speaker 3: can imagine a lot of these government agencies, the new

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Speaker 3: leadership takes time for them to get into office, and

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Speaker 3: so we're continuing to work through that process. And you know,

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Speaker 3: I think the good NEWSS we today are an incredibly

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Speaker 3: diverse asset manager.

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Speaker 1: You know, the one point five train that we.

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Speaker 3: Have no single investment team accounts for more than I

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Speaker 3: think eleven percent of our revenues. And so actually our

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Speaker 3: Franklin Fixed income team, which wasn't historically, particularly institutional, has

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Speaker 3: had tremendous net flows in there, and so again the

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Speaker 3: key is is to be able to have that.

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Speaker 1: Stable of capabilities.

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Speaker 3: We're a top ten alternatives manager. We have massive I

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Speaker 3: think we're we probably have about four hundre and sixty

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Speaker 3: billion in fixed income between private credit and.

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Speaker 1: Traditional fixed income.

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Speaker 3: So what makes a so resilient is the ability to

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Speaker 3: have all of this stable of opportunities

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Speaker 2: Looking forward to seeing how you navigate the year, that

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Speaker 2: is of course Franklin Templeton President and CEO, Jenny Johnn