Franklin Resources’ AUM dips again on continued net outflows

Franklin Resources had $724.1 billion in assets under management as of June 30, the end of the company's third quarter, down 1.8% from March 31 and 2.5% less than a year earlier, according to Franklin's earnings release issued Friday.

The money management firm has reported losses in AUM in three of the past six quarters.

Net outflows in the latest quarter were $12.1 billion, compared with net outflows of $10 billion in the previous quarter and net outflows of $7.3 billion in the year-prior period. In an executive commentary on the quarterly results, Gregory Johnson, chairman and CEO, and Kenneth Lewis, executive vice president and chief financial officer, said a decline in retail sales and redemptions from “a few large institutional redemptions” led to the quarter’s outflows.

“While clear challenges persist,” Mr. Johnson said in an earnings conference call Friday, net outflows to U.S. equities and multiasset strategies declined in the latest quarter.

Net outflows for U.S. equity were $200 million for the three months ended June 30, vs. net outflows of $2.5 billion in the previous quarter. Multiasset and balanced strategy net outflows also totaled $200 million, down from net outflows of $1.1 billion.

The largest net outflow for the quarter was in global and international equity, at $7.3 billion, vs. net outflows of $4.5 billion in the previous quarter.

Along with outflows, the quarter’s AUM decline was also the result of $11.1 billion in net market losses, according to the release. The losses were partially offset by $9.8 billion brought in through the acquisition of global value manager Edinburgh Partners, which closed in the first half of this year.

Messrs. Johnson and Lewis said in the earnings call they would consider further acquisitions if they fit the company’s strategic needs, particularly in real estate.

Equity assets totaled $310.6 billion at the end of the latest quarter, up 0.4% from three months earlier but down 0.6% from a year ago. Fixed-income assets totaled $266.7 billion, down 4.8% for the quarter and 5.8% for the year, and multiasset and balanced AUM were a combined $137.7 billion, unchanged from March 31 but down 2.5% from a year ago. Cash AUM was $9.1 billion, down 2% from three month earlier but up 52% from last year.

Franklin's operating revenues in the quarter totaled $1.56 billion, down 3.7% from the previous quarter and 3.4% lower than the year-earlier quarter. Net income was $402 million, down 9.3% and 2.1%, respectively.