QUOTE AND NEWS
Market Intelligence Center  Jul 15  Comment 
Franklin Resources Inc. (BEN) was identified by MarketIntelligenceCenter.com’s patented algorithms today after trading between $57.16 and $57.71 on Monday before closing at $57.33. A diagonal spread using a long position in the Jan. '15 $35.00...
Benzinga  Jul 10  Comment 
In a report published Thursday, Morgan Stanley analyst Betsy L. Graseck reiterated an Equal-Weight rating and $63.00 price target on Franklin Resources (NYSE: BEN). In the report, Morgan Stanley noted, “We estimate +$1.3B long-term net inflows...
DailyFinance  Jul 9  Comment 
SAN MATEO, CA -- (Marketwired) -- 07/09/14 -- Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE: BEN) today reported preliminary month-end assets under management by the company's subsidiaries of $920.5 billion at June 30, 2014,...
SeekingAlpha  Jul 7  Comment 
By Ashleigh Rogers: Asset management is a fickle business. Performance at funds is always due to a combination of skill (or lack thereof) and luck (good or bad), and thus the returns at funds managed by firms like Franklin Resources (BEN) tends to...
Benzinga  Jul 1  Comment 
Analysts at BMO Capital downgraded Symantec (NASDAQ: SYMC) from “outperform” to “market perform.” The target price for Symantec has been raised from $22 to $24. Symantec's shares closed at $22.90 yesterday. Analysts at UBS downgraded...
Wall Street Journal  Jun 22  Comment 
The investment-management firm has a global presence and lots of cash.
DailyFinance  Jun 18  Comment 
SAN MATEO, CA -- (Marketwired) -- 06/18/14 -- Franklin Resources, Inc. (the "Company") (NYSE: BEN) announced a quarterly cash dividend in the amount of $0.12 per share payable on July 11, 2014 to stockholders of record holding shares of common...
Benzinga  Jun 18  Comment 
Analysts at Goldman Sachs upgraded Franklin Resources (NYSE: BEN) from “neutral” to “buy.” The target price for Franklin Resources has been raised from $53 to $63. Franklin's shares closed at $56.17 yesterday. Analysts at BMO Capital...
Market Intelligence Center  Jun 16  Comment 
Franklin Resources Inc. (BEN) closed Friday at $55.61 and technical indicators recently have been bullish. Based in part on those numbers, MarketIntelligenceCenter.com's patented algorithms have identified a couple of attractive trading...
Benzinga  Jun 10  Comment 
In a report published Tuesday, Morgan Stanley analyst Betsy L. Graseck reiterated an Equal-Weight rating and $59.00 price target on Franklin Resources (NYSE: BEN). In the report, Morgan Stanley noted, “While we believe BEN will be a long-term...




 

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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