QUOTE AND NEWS
Dividend Growth Investor  Nov 21  Comment 
Franklin Resources Inc. (BEN) is a publicly owned asset management holding company. The firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. This dividend champion has paid dividends since 1981 and...
Jutia Group  Nov 12  Comment 
[Marketwired] - Fixed income investors seem to be caught between a rock and a hard place these days. A new fixed income survey from Franklin Templeton Investments reveals that yield is their top consideration when choosing ... Read more on this. ...
Jutia Group  Nov 10  Comment 
[Marketwired] - Franklin Resources, Inc. today reported preliminary month-end assets under management by the company's subsidiaries of $898.4 billion at October 31, 2014, compared to $898.0 billion at September 30, 2014, ... Read more on this. ...
Market Intelligence Center  Oct 31  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center are highlighting two trades on Franklin Resources Inc. (BEN) today after it closed at $54.79 on Thursday. For more conservative...
Jutia Group  Oct 29  Comment 
[Marketwired] - Franklin Universal Trust , a closed-end investment company managed by Franklin Advisers, Inc., announced changes today to the record date and date payable for the previously announced monthly dividend ... Read more on this. ...
TheStreet.com  Oct 27  Comment 
NEW YORK (TheStreet) -- Franklin Resources shares are up 0.54% to $53.70 on Monday after the finance company reported its fourthaquarter earnings results before the opening bell today. The company reported aafourthaquarter profit of $640.6...
newratings.com  Oct 27  Comment 
WASHINGTON (dpa-AFX) - San Mateo, California-based Franklin Resources Inc. (BEN) recorded higher preliminary net income attributable to the company of $640.6 million or $1.02 per share for the fourth quarter, as compared with $509.0 million or...
Forbes  Oct 24  Comment 
Wall Street is expecting higher profit for Franklin Resources when the company reports its fourth quarter results on Monday, October 27, 2014. The consensus estimate is calling for profit of 92 cents a share, a rise from 80 cents per share a year...
Market Intelligence Center  Sep 17  Comment 
After closing Tuesday at $55.66, Franklin Resources Inc. (BEN) presents an attractive opportunity to get a 3.95% return in just 122 days, which is an annualized return of 11.82% (for comparison purposes only). To enter this trade, sell one Jan....




 

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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