Franklin's May AUM Falls Slightly - Analyst Blog

Franklin Resources Inc. ( BEN ) declared preliminary assets under management (AUM) of $846.5 billion by its subsidiaries for May 2013. The company's results exhibited a marginal dip of 0.1% from $847.5 billion as of Apr 30, 2013. However, it increased 23.8% from $683.5 billion as of May 31, 2012.

Month-end total equity assets came in at $326.6 billion for Franklin, rising 0.2% from the prior month, and 21.9% 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 $381.8 billion, declining 0.5% from $383.7 billion as of Apr 30, 2013, but augmenting 23.3% from $309.7 billion as of May 31, 2012. Overall, tax-free assets accounted for only 22% of the fixed income assets, while the remaining 78% were taxable.

Franklin recorded $132.3 billion in hybrid assets, which inched up 0.2% from $132.1 billion in the prior month and surged 32.8% from $99.6 billion in the prior-year month.

Cash management funds were reported at $5.8 billion, in line with the prior month but waning 6.5% from the prior-year month.

Quarterly Performance

On a quarterly basis, as of Mar 31, 2013, Franklin reported total AUM of $823.7 billion, up from $781.8 billion as of Dec 31, 2012, driven by market appreciation of $24.5 billion and $18.3 billion of net new flows.

Simple monthly average AUM of $807.3 billion during the quarter climbed 6% sequentially. Net new flows were $18.3 billion versus $0.3 billion in the prior quarter.

Among other asset managers, Legg Mason Inc. ( LM ) and Invesco Ltd. ( IVZ ) are expected to release their preliminary AUM for May 2013 by the end of this week.

Our Viewpoint

Franklin's global footprint is an exceptionally 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 #3 (Hold). The better performing company in the same industry with a Zacks Rank #1 (Strong Buy) includes Virtus Investment Partners, Inc. ( VRTS ).

FRANKLIN RESOUR (BEN): Free Stock Analysis Report

INVESCO LTD (IVZ): Free Stock Analysis Report

LEGG MASON INC (LM): Free Stock Analysis Report

VIRTUS INVESTMT (VRTS): Free Stock Analysis Report

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

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

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