Franklin Profit Climbs 3.4% as Global Stock Rally Boosts Assets

Franklin Resources Inc. (BEN), the manager of the Franklin and Templeton mutual funds that has the majority of its equity assets in global stocks, said fiscal fourth-quarter profit climbed 3.4 percent as rising markets boosted assets.

Net income for the three months ended Sept. 30 increased to $509 million, or 80 cents per share, from $492.1 million, or 77 cents, a year earlier, the San Mateo, California-based company said today in a statement. Franklin missed the 87-cent average estimate of 13 analysts in a Bloomberg survey.

Franklin benefited from a rally in worldwide equities, driven by improving economies in China and Europe and the continuation of low-interest rate policies from central banks. Bill Gross, manager of the world’s biggest bond fund, said this week that the Federal Reserve is unlikely to lift its target rate for overnight loans between banks until 2016 because of weak payroll growth.

“Franklin has the scale, diversification and global footprint to take advantage of this environment,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in telephone interview before earnings were released.

Franklin’s shares, which closed yesterday at $54.29, gained 30 percent this year, compared with an increase of 34 percent for the 20-member Standard & Poor’s index of asset managers and custody banks.

The MSCI All Country World Index returned 18 percent in the year ended Sept. 30 and 8.1 percent in the quarter, including reinvested dividends.

Hasenstab’s Fund

Franklin had 40 percent of its $844.7 billion in assets in stocks, the bulk of it in global and international equities, company data show. Bonds represented 43 percent of assets, and hybrid funds with stocks and fixed income accounted for 16 percent.

The $69.4 billion Templeton Global Bond Fund (TPINX) suffered net redemptions of $1.2 billion in the quarter amid a flight from fixed income, estimates from Chicago-based Morningstar Inc. (MORN) show. The fund managed by Michael Hasenstab, has attracted $3.8 billion in 2013, according to Morningstar. Templeton Global Bond beat 76 percent of peers this year through Oct. 21.

Franklin’s largest fund, the $80.6 billion Franklin Income Fund (FKINX), won $1.7 billion in the quarter and $4.9 billion this calendar year, according to Morningstar. The fund, which buys stocks and bonds, outperformed 65 percent of rivals in 2013.

The company in June named Chief Executive Officer Greg Johnson chairman of the board after his father, Charles Johnson, retired. Yale University last month said it received a pledge of $250 million, the largest gift in its 312-year history, from Charles Johnson to build two new colleges.

Franklin split its stock 3-for-1 in July, altering the earnings per share originally reported in 2012. Companies typically split their stock when they determine the share price has become too high for individual investors.

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.