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Analyst Blog

Franklin Resources Inc. (BEN - Analyst Report) declared preliminary assets under management (AUM) of $908.3 billion by its subsidiaries for May 2014. The company’s results exhibited a rise of 1.4% from $895.4 billion as of Apr 30, 2014. Moreover, it surged 7.3% from $846.5 billion as of May 31, 2013.

Month-end total equity assets came in at $382.2 billion for Franklin, up 1.4% from the prior month and 17.0% on a year-over-year basis. Of the total equity assets, around 71% were from international sources, while the remaining 29% were from the U.S.

Total fixed income assets were $360.6 billion, up 1.4% from the prior month, while down 5.6% from $381.8 billion as of May 31, 2013. Overall, tax-free assets accounted for only 20% of the fixed income assets, while the remaining 80% were taxable.

Franklin recorded $158.7 billion in hybrid assets, which jumped 1.7% from $156.1 billion in the prior month and 20.0% from $132.3 billion in the prior-year month.

Cash management funds were reported at $6.8 billion, in line with the prior month but up from $5.8 billion in the prior-year month.

Quarterly Performance

On a quarterly basis, as of Mar 31, 2014, total AUM was $886.9 billion, up from $823.7 billion as of Mar 31, 2013, driven by market appreciation of $77.3 billion. Simple monthly average AUM of $876.4 billion climbed 9.0% year over year.

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.

Franklin currently carries a Zacks Rank #3 (Hold). However, a better performing company in the same industry with a Zacks Rank #1 (Strong Buy) is Woori Finance Holdings Co., Ltd. (WF - Snapshot Report).

Among other asset managers, Invesco Ltd. (IVZ - Analyst Report) and Legg Mason Inc. (LM - Analyst Report) are expected to release preliminary AUM for May 2014 later this week.