Franklin Resources Inc. (BEN) declared preliminary assets under management (:AUM) of $706.9 billion by its subsidiaries for the month of June 2012. The company’s results witnessed a rise of 3.4% from $683.5 billion as of May 31, 2012. However, it declined 3.7% from $734.2 billion as of June 30, 2011.
Month-end total equity assets came in at $278.4 billion, improving 3.9% from the prior month, but dipping 10.1% 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 $319.5 billion, increasing 3.2% from $309.7 billion as of May 31, 2012, and 5.4% from $303.1 billion as of June 30, 2011. Overall, tax-free assets accounted for only 25% of the fixed income assets, while the remaining 75% were taxable.
Franklin recorded $103.2 billion in hybrid assets, which grew 3.6% from $99.6 billion as of May 31, 2012. However, hybrid assets dipped 10.3% from $115.1 billion recorded in the prior-year month. Cash management funds were reported at $5.8 billion, down from $6.2 billion, both in the prior month and prior-year month.
On a quarterly basis, as of March 31, 2012, total AUM was $725.7 billion, up from $670.3 billion as of December 31, 2011, attributable to market appreciation of $50.9 billion and net new inflows of $5.6 billion. Moreover, AUM increased 3% on a year-over-year basis, mainly due to $14.8 billion of net new flows and $10.9 billion from acquisitions.
During the quarter, simple monthly average AUM climbed 5% sequentially and 3% year over year to $706.9 billion. Net new inflows were $5.6 billion as against outflows of $15.6 billion in the prior quarter and net inflows of $8.4 billion in the prior-year quarter.
Among Franklin’s peers, Invesco Ltd. (IVZ) is expected to announce its preliminary month-end AUM for the month of June, later this week.
Franklin's global footprint is in an exceptionally favorable strategic position owing to its well diversified AUM. Moreover, it is comfortably positioned to benefit from its strong balance sheet. Further, the company’s acquisitions, completed in calendar year 2011, are expected to strengthen its financials. However, the regulatory restrictions and the sluggish economic recovery could mar the improvement in AUM while increasing costs.
Franklin currently retains its Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term ‘Neutral’ recommendation on the stock.
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