California-based, Franklin Resources Inc. (BEN) reported impressive growth in its preliminary month-end assets under management (AUM) by its subsidiaries on October 11. The company’s AUM of $644.9 billion at the end of September 30, 2010 registered an increase of 23.2% year over year and a 7.4% rise over the previous month.
Franklin Resources’ total equity assets at September end were approximately $273.7 billion, up from $245.4 billion at the end of August 2010 and $247.0 billion at the close of September 2009. Of the total equity assets, roughly 75% were from international sources while the remaining 25% was from the U.S.
Fixed-Income assets were approximately $253.8 billion, up 4.6% from $242.6 billion in the previous month and 48.2% above $171.3 billion registered in the year-ago comparable month. Of the total, roughly 31% is tax-free while the rest 69% were taxable.
Hybrid assets jumped 5.2% and 12.8% to $110.8 billion compared with $105.3 billion as of August 2010 and $98.2 billion as of September 2009, respectively. Cash Management funds were approximately $6.6 billion, down slightly from $7.1 billion at the end of the previous month and $6.9 billion at the end of September 2009.
Franklin Resources is a global investment management company which derives the majority of its revenue and net income from investment advisory and related services to retail mutual funds, institutional and private accounts and other investment products.
As of June 30, 2010, Franklin reported AUM of $570.5 million, up 26.4% on a year-over-year basis, primarily due to positive net new flows of $62.7 billion and market appreciation of $59.3 billion. The improvement took place in both equity and fixed-income products due to higher sales and lower redemptions on a year-over-year basis.
Franklin’s closest competitor, BlackRock Inc. (BLK), had reported approximately $3.15 trillion AUM for the period ended June 2010, compared with $1.7 trillion reported in the prior-year quarter.
Despite being well positioned with a diversified AUM and balance sheet, we do not think Franklin is immune to the volatile economic environment at all; its revenues and AUM bear witness to its vulnerability. Going forward, with the market reviving gradually, the company is expected to post better results in the second half of 2010.
We currently maintain a Neutral recommendation on the stock.
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