Franklin October AUM Advances - Analyst Blog

By Zacks Equity Research,

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Franklin Resources Inc. ( BEN ) declared preliminary assets under management (AUM) of $868.9 billion by its subsidiaries for Oct 2013. The company's results exhibited an increase of 2.9% from $844.7 billion as of Sep 30, 2013. Moreover, it surged 15.3% from $753.9 billion as of Oct 31, 2012.

Month-end total equity assets came in at $357.4 billion for Franklin, up 4.8% from the prior month and 21.1% on a year-over-year basis. Of the total equity assets, around 72% were from international sources, while the remaining 28% were from the U.S.

Total fixed income assets were $362.6 billion, inching up 0.9% from $359.5 billion as of Sep 30, 2013 and augmenting 6.1% from $341.9 billion as of Oct 31, 2012. Overall, tax-free assets accounted for only 20% of the fixed income assets, while the remaining 80% were taxable.

Franklin recorded $142.3 billion in hybrid assets, which jumped 3.5% from $137.5 billion in the prior month and 28.4% from $110.8 billion in the prior-year month.

Cash management funds were reported at $6.6 billion, in line with the prior month but increased 10.0% from the prior-year month.

Quarterly Performance

On a quarterly basis, as of Sep 30, 2013, Franklin reported total AUM of $844.7 billion, up 4.0% from $815.0 billion as of Jun 30, 2013, driven by market appreciation of $33.1 billion.

Simple monthly average AUM of $827.8 billion during the quarter decreased 1.0% sequentially, but increased 14.0% year over year. Net new flows were negative $2.7 billion versus $8.4 billion in the prior quarter and $2.9 billion in the prior-year quarter.

Competitive Landscape

Invesco Ltd. ( IVZ ) reported a rise in its preliminary month-end AUM for Oct 2013. The AUM for the month was $763.9 billion, up 2.5% from $745.5 billion at the end of Sep 2013. Favorable market returns and positive long-term net flows primarily supported the growth. However, foreign exchange led to a $1.2 billion decline in AUM.

Among other asset managers, Legg Mason Inc. ( LM ) is expected to release its preliminary AUM for Oct 2013 by the end of this week.

Our Viewpoint

Franklin's global footprint is a favorable strategic point as its AUM is well diversified. The company is also poised to benefit from its strong balance sheet. However, regulatory restrictions and sluggish economic growth could mar AUM improvement and alleviate costs. Additionally, higher expenses remain a matter of concern.

Franklin currently carries a Zacks Rank #2 (Buy). However, a better performing company in the same industry with a Zacks Rank #1 (Strong Buy) is Waddell & Reed Financial, Inc. ( WDR ).

FRANKLIN RESOUR (BEN): Free Stock Analysis Report

INVESCO LTD (IVZ): Free Stock Analysis Report

LEGG MASON INC (LM): Free Stock Analysis Report

WADDELL&REED -A (WDR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BEN , IVZ , LM , WDR

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