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Franklin Resources assets drop 2% in quarter, 6% for the year

Franklin Resources Inc. reported its assets under management fell to $720 billion as of Dec. 31, down 2% from the previous quarter and 6% from a year earlier, as net outflows slowed but continued, according to financial statements released Friday.

The San Mateo, Calif.-based company reported $14.4 billion in net outflows in the fourth quarter of 2016, down from $17.7 billion in net outflows in the Sept. 30 quarter and $8.9 billion in net outflows in the year-over-year quarter.

Franklin has been among the hardest hit money managers in terms of net outflows due to performance issues in key funds and a shift by investors toward passive strategies. But Franklin CEO Greg Johnson, in prepared remarks accompanying the company's earnings release, said the firm has been experiencing a strong rebound in performance among key funds, including the $40.9 billion Templeton Global Bond Fund, which outperformed its Lipper peer group average by 1,300 basis points during the most recent quarter.

But, Mr. Johnson said, “it can take a year or more of sustained outperformance before flows significantly turnaround.”

The Templeton Global Bond Fund has been one of several Franklin funds with large outflows over the past several years. The company did not break down outflows for the fund in its presentation.

Franklin reported net income of $440.2 million in the Dec. 31 quarter, down 7% from the previous quarter and 2% in the year-earlier quarter.

Operating revenue of $1.56 billion in the Dec. 31 quarter was down 3% from the previous three months and 11% from the year-over-year quarter.