October 25, 2018 01:00 AM

Franklin's outflows take toll; AUM down 1% for quarter and 5% for year

Bloomberg

Franklin Resources had $717.1 billion in assets under management as of Sept. 30, the company's fourth quarter, down 1% from the end of the previous quarter and a 5% drop from a year earlier, according to Franklin's earnings release issued Thursday.

Assets under management at Franklin have declined in four of the past six quarters.

Net outflows in the latest quarter were $13.6 billion, compared with net outflows of $12.1 billion in the previous quarter and net outflows of $5.9 billion in the year prior.

Institutional net outflows were $2.7 billion in the quarter ended Sept. 30, vs. net outflows of $2.1 billion in the previous quarter and net outflows of $3.9 billion in the quarter ended Sept. 30, 2017.

Gregory Johnson, Franklin chairman and CEO, said in a commentary on the earnings that the outflows in the latest quarter were the result of decreased international sales and the redemption of an $820 million global equity mandate by an unnamed U.S. client.

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In the latest quarter, net outflows were $8.2 billion from equities, $5 billion from fixed income and $400 million from multiasset and balanced strategies. In the previous quarter, net outflows for U.S. equity were $7.5 billion; fixed income, $4.4 billion; and multiasset and balanced, a combined $200 million.

Global and international equity sustained the largest outflow in the latest quarter, at $7.3 billion.

Equity assets totaled $309.6 billion as of Sept. 30, even with the June 30 tally and 2.3% below the year-earlier date. Fixed-income assets were $259.5 billion, down 3% and 9.6%, respectively; and multiasset and balanced funds were a combined $138.9 billion, down 1% and 2.9%, from the prior dates. Cash totaled $9.3 billion, up 2% from three months earlier and 47% higher than a year earlier.

Franklin's fiscal fourth-quarter operating revenue totaled $1.527 billion, down 2% from the previous quarter and 6% lower than the quarter ended Sept. 30, 2017. Net income was $502 million, down 5% and 14%, respectively.