Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, said fiscal third- quarter earnings rose 21 percent as deposits in its global bond fund ranked second behind Bill Gross’s Pimco Total Return Fund.
Net income for the quarter ended June 30 rose to $360.5 million, or $1.58 a share, from $297.7 million, or a revised $1.28, a year earlier, the San Mateo, California-based company said today in a statement. The average estimate of 18 analysts surveyed by Bloomberg was $1.50 a share.
Franklin benefited from investors who favored bonds over stocks as its $34.6 billion Templeton Global Bond Fund attracted $8.8 billion in the first half of the year, topped only by the $20.9 billion deposited in the $234 billion Pimco Total Return, the world’s biggest bond fund, according to data compiled by Morningstar Inc. U.S. fixed-income funds attracted $139 billion through June, compared with $2.6 billion for equity funds, Chicago-based Morningstar’s estimates show.
“They should be the best in the industry when it comes to flows,” Douglas Sipkin, a New York-based analyst with Ticonderoga Securities, said in a telephone interview before Franklin announced earnings.
Franklin rose $3.58, or 3.7 percent, to $99.82 at 4:10 p.m. in New York Stock Exchange composite trading. The stock declined 5.2 percent this year, compared with a 7.4 percent decrease for Standard & Poor’s 15-company index of asset managers and custody banks.
Franklin attracted $18.8 billion from investors during the quarter, Chief Executive Officer Gregory Johnson said in a pre- recorded presentation on the company’s website. Global and international bond funds accounted for $16.7 billion of the deposits.
The Templeton Global Bond Fund, run by Michael Hasenstab, gained 11 percent annually for the past five years, better than 98 percent of rivals, according to data compiled by Bloomberg. The $26.7 billion version of the fund sold outside the U.S. brought in $11.7 billion through June, according to Strategic Insight, a New York-based research firm.
Franklin had $236 billion in equity assets under management and $227 billion in bonds at the end of June, according to a statement on July 12. The company was helped by the 11 percent gain including dividends in the MSCI World Index, which tracks global stock values, in the year ended June 30.
“Assuming we ever get a shift back into equities, Franklin is well positioned,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in a telephone interview before Franklin released results.