Franklin February AUM Perks Up - Analyst Blog

Franklin Resources Inc. BEN declared preliminary assets under management (AUM) of $882.2 billion by its subsidiaries for Feb 2014. The company's results exhibited a 2.9% rise from $857.2 billion as of Jan 31, 2014. Moreover, it surged 8.4% from $813.8 billion as of Feb 28, 2013.

Month-end total equity assets came in at $370.7 billion for Franklin, up 5.0% from the prior month and 16.8% on a year-over-year basis. Of the total equity assets, around 71% were from international sources, while the remaining 29% were from the U.S.

Total fixed income assets were $353.8 billion, up around 1.0% from $351.1 billion as of Jan 31, 2014 but down 3.0% from $364.7 billion as of Feb 28, 2013. Overall, tax-free assets accounted for only 20% of the fixed income assets, while the remaining 80% were taxable.

Franklin recorded $151.3 billion in hybrid assets, which jumped 3.2% from $146.6 billion in the prior month and 20.4% from $125.7 billion in the prior-year month.

Cash management funds were reported at $6.4 billion, in line with the prior month but up from $5.9 billion in the prior-year month.

Quarterly Performance

On a quarterly basis, as of Dec 31, 2013, total AUM was $879.1 billion, up from $781.8 billion as of Dec 31, 2012, driven by market appreciation of $77.3 billion and $24.0 billion of net new flows. Simple monthly average AUM of $865.9 billion during the quarter climbed 13% year over year.

Among other asset managers, Invesco Ltd. IVZ and Legg Mason Inc. LM are expected to release preliminary AUM for Feb 2014 later this week.

Our Viewpoint

Franklin's global footprint is a favorable strategic point as its AUM is well diversified. The company is also poised to benefit from its strong balance sheet. However, regulatory restrictions and sluggish economic growth could mar AUM improvement and alleviate costs.

Franklin currently carries a Zacks Rank #3 (Hold). However, a better performing company in the same industry with a Zacks Rank #1 (Strong Buy) is Lazard Ltd. LAZ.