Franklin Resources’ assets under management declined again in the first quarter, ending with $742.6 billion as of March 31, as double-digit net outflows continue.
Franklin’s AUM was down 3% from Dec. 31 and down 16% from March 31, 2015, the company reported Wednesday in its earnings release. The decline comes primarily due to $24.6 billion of net outflows, the company said.
Franklin has seen almost $75 billion in net outflows in the nine-month period ended March 31, mostly large outflows from several of its equity mutual funds and separate accounts.
The outflows were partially offset by $4.2 billion of market appreciation and a $4.6 billion increase from foreign-exchange revaluation, Franklin said.
The company’s operating margin also continued to decline. Franklin reported a 33.3% operating margin in the latest quarter, down from 37.2% the previous three months and 37.7% in the year-over-year quarter.
Net income of $360.4 million was down 20% from the previous quarter and down 41% from the first quarter of 2015. Operating revenue of $1.61 billion was down 8% from the previous three months and down 20% from the year-over-year quarter.
Franklin CEO Gregory Johnson said in a conference call with analysts that institutional net flows were hit harder in the latest quarter due in a large part to a handful of “lumpy” redemptions. “Most of these redemptions were outside of our control, such as model allocation changes and other clients’ needs to raise liquidity,” Mr. Johnson said.
He said global equity strategies continued to have net outflows in the quarter, as improving flows from several funds were more than offset by institutional redemptions. The two largest redemptions totaled $1.8 billion but were not performance-related, Mr. Johnson said.
The company did not break down the institutional outflows in the earnings release.
