Analyst Note| Greggory Warren |
There was little in Franklin Resources' fiscal first-quarter results that would alter our long-term view of the firm. We are leaving our $28 per share fair value estimate in place. Franklin closed out the December quarter with a record $1.388 trillion in assets under management, or AUM, up 7.0% sequentially but down 12.1% on a year-over-year basis. Net long-term outflows of $10.9 billion during the quarter were a marked improvement over the $20.4 billion that flowed out during the September quarter but were still well off the quarterly run rate of $6.6 billion in net outflows seen over the prior two years. The outflows were primarily driven by Franklin's fixed-income platform ($13.3 billion), with the unit's annualized organic AUM growth rate of negative 10.8% for the quarter better than the negative 13.7% and negative 22.2% annualized organic AUM growth rates generated by actively managed taxable bond funds and municipal bond funds, respectively, during the December quarter (according to data provided by Morningstar Direct).