O’Shaughnessy manages $6.4 billion in assets, including $1.8 billion through its custom-indexing platform, named Canvas.
The financial terms of the deal weren’t disclosed.
Financial advisers use platforms like Canvas to create bespoke portfolios—helping clients select investments to fit their tax-planning needs, or choose those that reflect their beliefs on social issues such as climate change
Advances in computer power and other technologies have ushered in new digital platforms that can customize investors’ holdings at a fraction of the cost and manpower once required. Their surging popularity and growth potential has caught the attention of some of the world’s largest money managers, including BlackRock Inc., Vanguard Group, Morgan Stanley and Fidelity Investments, each of whom have in recent years either invested in one of the burgeoning custom-indexing platforms or acquired one outright.
For an industry that has grappled in recent years with pressures to lower fees on traditional investing funds, bespoke accounts have emerged as a key front in their bid to bolster profit margins.
“It’s a big part of the future,” said Roger Paradiso, global head of product solutions at Franklin’s Franklin Templeton. “Personalization is going to become a bigger driver for everything we want to do. It’s much more important to individuals.”
Mr. Paradiso said O’Shaughnessy would remain a stand-alone asset manager. Its Canvas platform, though, could be used by some of the firm’s other investing boutiques, including bond specialist Western Asset Management Co.
Franklin manages $130 billion in client assets within separately managed accounts.
Most of the assets held in customized portfolios constructed by Canvas are individual stocks, but in time the platform could expand to include fixed-income assets, said Patrick O’Shaughnessy, the firm’s chief executive.
O’Shaughnessy’s some 40 employees are expected to join Franklin, the companies said. The firm launched its Canvas platform in early 2019.
—Dawn Lim contributed to this article.
Write to Justin Baer at email@example.com
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