QUOTE AND NEWS
Benzinga  10 hrs ago  Comment 
Analysts at Keefe Bruyette & Woods downgraded Franklin Resources (NYSE: BEN) from “outperform” to “market perform.” The target price for Franklin Resources has been lowered from $63 to $61. Franklin Resources' shares closed at $54.59...
SeekingAlpha  Mar 23  Comment 
By Ivan Kitov: We revised our pricing model for Franklin Resources (BEN) presented on March 18, 2012. According to Yahoo.com: The firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It manages,...
Clusterstock  Mar 18  Comment 
  Please enable Javascript to watch this video   Ben Horowitz, co-founder of Andreessen Horowitz, talks about the reality of having to demote a friend at work. Horowitz is the author of a new book, "The Hard Thing About Hard...
Clusterstock  Mar 14  Comment 
  Please enable Javascript to watch this video   Here's what happened when Ben Horowitz asked his employees to work 7 days/week during a pivotal time for his company. Produced by Justin Gmoser NOW WATCH: Why Firing An Executive Is...
StreetInsider.com  Mar 12  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Dividends/Franklin+Resources%2C+Inc.+%28BEN%29+Declares+%240.12+Quarterly+Dividend%3B+0.9%25+Yield/9275817.html for the full story.
Benzinga  Mar 11  Comment 
In a report published Tuesday, Morgan Stanley analyst Matthew Kelley reiterated an Equal-Weight rating and $60.00 price target on Franklin Resources (NYSE: BEN). In the report, Morgan Stanley noted, “We estimate ~$4B of net long-term outflows...
Sydney Morning Herald  Mar 3  Comment 
One day after Joyce declared a $252m first half loss, Franklin Resources increased its holding in Qantas. Interesting, no?     
DailyFinance  Feb 25  Comment 
SAN MATEO, CA -- (Marketwired) -- 02/25/14 -- Franklin Templeton Investments (NYSE: BEN) today introduced Income For What's Next, a comprehensive program geared to address the complexities and changing reality of retirement today and provide...
Benzinga  Feb 11  Comment 
In a report published Tuesday, Morgan Stanley analyst Matthew Kelley reiterated an Equal-Weight rating on Franklin Resources (NYSE: BEN), but removed the $65.00 price target. In the report, Morgan Stanley noted, “We estimate roughly -$3B of...
DailyFinance  Feb 10  Comment 
SAN MATEO, CA -- (Marketwired) -- 02/10/14 -- Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE: BEN) today reported preliminary month-end assets under management by the company's subsidiaries of $857.2 billion at January 31, 2014,...




 

With nearly $600 billion in Assets under management (AUM)[1], Franklin Resources (NYSE: BEN) is the 29th largest asset manager in the world.[2] Retail investors in Franklin mutual funds account for 69% of assets under management.[3]

Franklin Resources is also sensitive to American investors' (73% of new sales[4]) portfolio allocation decisions. With management fees accounting for 58% of Franklin's revenue,[5] international exposure directly impacts Franklin's operating revenue. A higher equity/international mix increases Franklin's management fee revenue, while a shift towards fixed-income decreases it, because Franklin charges customers higher management fees on international and equity funds than domestic and fixed income ones.

Company Overview

Franklin manages international and domestic equity, bond, and hybrid mutual funds for over 22 million retail, institutional, and high-net worth clients.[6] Strong equity markets, acquisitions, and net fund inflows have helped the asset manager triple Assets Under Management (AUM), which is the total money Franklin invests for all its customers, since 2002.[3]

  • Management fees are what customers pay the investment managers to advise, manage and implement investment decisions and also to cover administrative costs. The amount fluctuates between funds, with international equity typically charging the highest and domestic fixed-income the lowest.
  • Underwriting and distribution charges are sale costs and commissions charged to the purchaser of mutual funds. The expense can range from 0-5.75% and be front-loaded (buyer of fund pays upfront), level (annually), or back-ended (when the buyer sells fund shares).[7]

Franklin offers mutual funds with 12b-1 fees, which are sales commissions directed to the advisor, in order to promote the selling of its funds to retail customers. Franklin essentially distributes the sales charge to the advisor that sold it, and profits mainly from the management fee.

Business & Financial Metrics[8]

In 2009, BEN generated a net income of $896.8 million on revenues of $4.19 billion. This represents a 43.5% decrease in net income and a 30.5% decrease in operating revenues from 2008, when the company earned $1.59 billion on $6.03 billion in revenues.

Key Trends & Forces

International equity and bonds affect Franklin's AUM.

The company's foreign investments as a percent of Assets under management (AUM) is 59%[1]. This international exposure almost triples industry peer, T. Rowe Price Group (TROW), whose AUM consist of 20% international positions[9]. This exposure will benefit Franklin more than competitors when foreign assets appreciation is higher than domestic ones, but the opposite is true if the U.S. is stronger than international markets. A strong U.S. dollar and better relative Gross Domestic Product growth compared to the world are typically bullish for U.S. positions.

Competition

Franklin Resources competes directly with traditional mutual fund companies like Eaton Vance (EV), T. Rowe Price Group (TROW), and Janus Capital Group (JNS). The company competes not only for customers, but also, for investment managers. A manager with a good track record of outperformance will cost more, but at the same time, outperformance leads to larger relative increases in Assets under management (AUM). Performance is a key to obtaining new investors and keeping existing ones, especially when a fund has a large retail investor class that is more likely to switch between mutual funds. Asset managers also compete for access to financial advisors, because they make investment decisions for their clients. Franklin offers share classes with a 12b-1 fee, or sales commission, to entice advisors to sell its funds.

Franklin Resources also competes with close end funds and Exchange Traded Funds for assets. Companies like Barclays (BCS) offer ETFs that give investors more tax management options and lower management fees on average[10].

References

  1. 1.0 1.1 Form 10-Q 3Q 2008, Item 2, Pg. 27
  2. Pensions & Investments Website
  3. 3.0 3.1 Franklin Resources Investor Presentation
  4. (BEN) Form 10-K, FY 2007, Item 6, Pg. 65
  5. Franklin Templeton UK Website
  6. (Ben) Form 10-K, FY 2007, item 1, Pg.10
  7. BEN 2009 10-K pg. 37  
  8. Wikinvest (TROW) Author: Dave Cleveland
  9. iShares Education Center
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