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Franklin's (BEN) AUM Down as Equity Assets Take a Hit

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Franklin Resources Inc. (BEN - Free Report) announced preliminary assets under management (AUM) by its subsidiaries of $737.3 billion for May 2016. The results exhibited around 1.3% decline from $747.1 billion as of Apr 30, 2016. Moreover, the figure decreased 17% from $888.4 billion as of May 31, 2015.

Month-end total equity assets came in at $302.4 billion, down 1.3% from the prior month and 18.9% on a year-over-year basis. Of the total equity assets, around 67% were from international sources, while the remaining 33% was from the U.S.

Total fixed income assets were $294.3 billion, down 1.7% from the prior month and 15.5% from $348.4 billion recorded in May 31, 2015. Overall, tax-free assets accounted for only 25% of the fixed income assets, while the remaining 75% was taxable.

Franklin recorded $134.3 billion in hybrid assets, which declined slightly from $135.0 billion recorded in the prior month and 15.9% from $159.6 billion in May 2015.

Cash management funds were reported at $6.3 billion, in line with the prior month figure but down from $7.4 billion recorded in May 2015.

Our Viewpoint

Though the company’s global presence helps it diversify AUM, regulatory restrictions and sluggish economic recovery might mar growth and raise costs.  Moreover, Franklin is subject to numerous regulations by the U.S. and non-U.S. regulators that pose threat to its operations and may even hurt profitability.

Franklin currently carries a Zacks Rank #3 (Hold). A better-ranked finance company is SEI Investments Co. (SEIC - Free Report) with a Zacks Rank #2 (Buy).

Among other asset managers, Legg Mason Inc. and Invesco Ltd. (IVZ - Free Report) are expected to release preliminary AUM results for May 2016 later this week.

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