Franklin Resources, Inc. (NYSE:BEN) Q2 2016 Earnings Conference Call - Preliminary Transcript

Apr 27, 2016 • 11:00 am ET


Franklin Resources, Inc. (NYSE:BEN) Q2 2016 Earnings Conference Call - Preliminary Transcript


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Welcome to Franklin Resources' Earnings Commentary for the quarter ended March 31, 2016. Statements made in this commentary regarding Franklin Resources Inc., which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including in the risk factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. This commentary was pre-recorded.

Gregory E. Johnson

Hello, and thank you for listening to our commentary on Second Quarter Results. I'm Greg Johnson, CEO and I'm joined by Ken Lewis, our CFO. The March quarter began with continued challenges for our business as global equities got off to their worst start in the new year since the depths of the global financial crisis. Many markets then rebounded sharply from mid-February lows to finish the quarter in positive territory. This rebound also marked encouraging transition for us, as many of our weakest performing sectors and regions of 2015 were among the strongest performers in the quarter, and several of our key strategies benefited from this rotation.

Longer term performance remains mixed with the relative underperformance some of our larger strategies still weighing on aggregate asset weighted performance numbers and flows. However, we did start to see some encouraging signs in the form of improved performance, as well as improved redemption trends as the quarter progressed.

Financial results for the quarter was solid, as we continue to exercise expense discipline, despite some notable one time items. The firm also demonstrated strong capital management returning nearly $1.9 billion to shareholders over the past 12 months. We continue need to invest in future growth opportunities, such as the recent expansion of our multi-asset solution capabilities with a new customized open architecture offering that enables global financial institutions to address the needs of their specific global investor base, an area where we've seen strong interest and momentum.

This quarter, we also continued to build out our local asset management capabilities with the launch of a new Polish fund umbrella after receiving our license from a local regulator last quarter. The fun launch is a natural evolution of our business in Poland. We've had a presence since 1997 and where today we have three offices and more than 700 employees.

Looking at aggregated long-term investment performance on Slide 6, relative performance remain mixed across the organization, but we're encouraged by some recent performance trends. Franklin Income Fund, for example, benefited from broad-based strength across equity holdings, traditionally defensive equity sectors such as utilities, energy and telecoms that offer high dividend yields rally in the wake of lower rates and higher energy prices. The fund is seeing a strong improvement in performance ranking