Franklin Resources (NYSE:BEN), in its recent earnings call, reported both its quarterly and fiscal year results for the period ending September 30, 2023. Despite the challenging global financial markets, the company has shown progress in executing its long-term corporate priorities and expanding its investment capabilities. With strategic acquisitions and a focus on key growth areas, Franklin Resources is well-positioned to capture market opportunities and expects increased investor activity in the future.
Key takeaways from the call:
- Franklin Resources' assets under management (AUM) increased by 6% to $1.37 trillion, with strong investment performance across various strategies.
- The company saw net outflows of $21 billion, a 23% improvement from the previous year.
- Alternative AUM increased by over 13% to $255 billion, representing approximately 19% of long-term AUM.
- Franklin Resources' ETF business achieved significant growth, with net inflows of nearly $4 billion in the fiscal year.
- The company's pending acquisition of Putnam Investments is projected to add approximately $150 million in adjusted operating income.
- Franklin Resources remains committed to investing in key growth areas, including alternative asset management, insurance and retirement channels, and technology-related distribution.
The company's CFO and COO provided an update on the financial results and the pending Putnam acquisition. They emphasized the growth of separately managed accounts (SMAs) and the flexibility of delivering products through different vehicles. They also provided updates on expense growth for the next year, mentioning that expenses are expected to be approximately flat, with the Putnam acquisition expected to close in the fourth quarter.
In the fiscal year, Franklin Templeton expanded its SMA platform, launching products focused on customization and tax management. Canvas, a personalized portfolio solution, saw significant growth with net inflows of approximately $1.5 billion and 20 new partnerships. Private Wealth Management AUM reached $34 billion, generating long-term net inflows for the 12th consecutive quarter.
Looking ahead to 2024, Franklin Templeton plans to expand its business in alternative asset management, insurance and retirement channels, customization, technology-related distribution, and private wealth management. The company also discussed the impact of the Putnam acquisition on the company's earnings and mentioned that it is expected to reduce their expense to fee ratio (EFR) by 0.2 basis points.
During the earnings call, Franklin Templeton discussed its plans for growth and expansion in various channels. The company aims to become a better distribution partner for retirement platforms such as Empower, Principal, Nationwide, and Fidelity, offering stable value and target date fund options. The company also highlighted the benefits of merging with Putnam, mentioning the complementary distribution forces and the potential to add to the sales force.
The company provided guidance on expenses and compensation, stating that fiscal '24 expenses would be flat excluding performance fees and other comps. The company also addressed questions about its alternatives business, active ETFs, and the Putnam transaction. Finally, the company discussed the growth potential of private credit in the wealth channel and its focus on developing products that combine private credit and traditional fixed income.
Franklin Templeton remains committed to its long-term corporate priorities and is focused on providing these excess returns responsibly. The company expressed its gratitude to employees and its excitement about the upcoming acquisition of Putnam.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.