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Franklin's AUM Growth on Track, June Number Up 1.3%

Zacks Equity Research

Franklin Resources Inc. (BEN) declared preliminary assets under management (:AUM) of $920.5 billion by its subsidiaries as of Jun 2014, up 1.3% from $908.3 billion as of May 31, 2014. Moreover, it surged 12.9% from $815.0 billion as of Jun 30, 2013.

Notably, total AUM increased from $857.2 billion as of Jan 31, 2014 to $920.5 billion as of Jun 30, 2014, increasing sequentially 2.9%, 0.5%, 1.0%, 1.4% and 1.3%, respectively, in each of the months from Feb 2014 to Jun 2014.

For Jun 2014, month-end total equity assets came in at $382.2 billion for Franklin, up 1.6% from the prior month and 23.9% 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 $363.3 billion, up nearly 1% from the prior month while it fell nearly 1% from the prior-year period. Overall, tax-free assets accounted for only 20% of the fixed income assets, while the remaining 80% were taxable.

Franklin recorded $162.7 billion in hybrid assets, reflecting an increase of 2.4% from the prior month and 25.6% from the prior-year month.

Cash management funds were reported at $6.4 billion, down 5.9% from the prior month while it came in line with in the prior-year month.

Our Viewpoint

We expect the uptrend in AUM to continue going forward as markets are improving, though at a sluggish pace. Further, Franklin's global footprint is a favorable strategic point as its AUM portfolio is well diversified.

Among other asset managers, Legg Mason Inc. (LM) and Invesco Ltd. (IVZ) are expected to report their monthly AUM data soon.

Franklin currently carries a Zacks Rank #2 (Buy). Noah Holdings Ltd. (NOAH) is a better-ranked company in this space with a Zacks Rank #1 (Strong Buy).

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