Jennifer M. Johnson, Franklin's president and CEO, told analysts during an earnings call Tuesday that "we've made remarkable progress ahead of schedule" in integrating Legg Mason into Franklin's operations.
She added that the firm's combined global distribution team is fully functional and is "cross-selling investment products" to both institutional and retail investors.
Ms. Johnson said in a news release accompanying the earnings report that "we're already seeing the benefits of adding world-class franchises (from Legg Mason) to an already strong set of investment capabilities. Case in point, U.S. fixed income attracted record net flow of $5.7 billion in the quarter. We were pleased to see strong long-term net flows for Western Asset (Management), which reached $410 billion in long-term assets and $487 billion in total assets, both their highest levels in more than a decade."
With the addition of Legg Mason assets in the quarter ended Sept. 30, combined U.S. and international assets all increased in the company's four long-term strategy classes.
- Franklin's fixed-income strategies increased 210.8% in the current quarter to $656.7 billion and were up 148.8% over the year ended Sept. 30.
- Assets managed in alternative strategies rose 165% over the three-month period and 175.6% over the year to $124 billion, albeit from a small base of $46.8 billion in the prior quarter.
- Equity strategies were up 70.5% in the quarter and 72.4% in the year to $432 billion.
- Multiasset approaches rose 12.9% to end the current quarter with$133.8 billion and up 8.3% for the 12-month period.
Short-term cash management strategies were up 596.2% to $72.4 billion from a base of $10.4 billion as of June 30 and up 662.1% from Sept. 30, 2019.
Matthew Nicholls, executive vice president and chief operating officer, said on the conference call that Franklin's unfunded mandates companywide total $11.5 billion with about $6 billion of slated for fixed-income strategies. He said the company expects that about $500 million of the total will be invested or committed in the fourth quarter.
Analysts on Tuesday's conference call were curious whether Franklin remains the lookout for more acquisition targets after the purchase of Legg Mason.
Mr. Nicholls stressed that "we are very, very focused on maximizing the acquisition of Legg Mason," but noted that "we are one of the companies in the industry that is actively pursuing opportunities, particularly for distribution."
Ms. Johnson added that Franklin has "intentional dry powder. We want to stay in the flow because we do want to increase our high-net worth business. You never know."
Franklin's operating revenue totaled $1.7 billion in the quarter ended Sept. 30, up 41.7% from the previous quarter and up 104.9% from third quarter 2019.
For comparison, Franklin's net operating revenue totaled $1.2 billion in the quarter ended June 30 while Legg Mason's revenue was $662 million.
