Franklin Resources' AUM slips 2% in quarter, drops 6% for year

Franklin Resources' assets under management slipped to $866.5 billion during the quarter ended June 30, down 2% from the previous quarter and 6% from the year earlier, the company reported Wednesday.

Net outflows in the most recent quarter of $11.1 billion and market depreciation of $3.9 billion were partially offset by a $1.8 billion increase in AUM from foreign-exchange revaluations, the company said in its earnings release.

The company had reported net outflows of $5.6 billion in the previous quarter.

Year over year, the company said AUM decreased $54 billion primarily due to $20.3 billion of net outflows, a $17.7 billion decrease from foreign exchange revaluations and $10.9 billion of market depreciation. Greg Johnson, president and CEO, said in a conference call with analysts that Franklin intended to enter the marketplace with smart beta ETF's and rule-based ETF's through acquiring a company, building capabilities itself, or a combination of the two.

Mr. Jonson said the company offers one exchange-traded fund and it “needs friends.” He offered no timetable on additional ETF strategies.

Net income of $504.2 million in the quarter was down 17% from the previous quarter and down 13% from a year earlier.

The company said currency fluctuations, as the U.S. dollar rose against other currencies, affected overall earnings in the latest quarter.

Franklin has 12% of its AUM in foreign currency.

The company reported operating revenue of $2 billion in the quarter, flat from the previous year and down 6% year over year.