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Franklin Resources Inc. F2Q10 (Qtr End 03/31/10) Earnings Q&A Conference Call Transcript

Franklin Resources Inc. F2Q10 (Qtr End 03/31/10) Earnings Q&A Conference Call Transcript

Franklin Resources Inc. (BEN)

F2Q10 (Qtr End 03/31/10) Earnings Q&A Conference Call

April 28, 2010 04:30 pm ET


Greg Johnson - CEO

Ken Lewis - CFO


Bill Katz - Citigroup

Jeff Hopson - Stifel Nicolaus

Mike Carrier - Deutsche Bank Cynthia Mayer - Banc of America/Merrill Lynch

Ken Worthington - JPMorgan

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Good afternoon. And welcome to the Franklin Resources Earnings Conference Call for the quarter ended March 31, 2010. My name is Brandy and I will be your conference operator today. Please note that the financial results to be discussed in this conference call are preliminary. Statements made in this conference call regarding Franklin Resources Incorporated 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 and the risk factors and MD&A sections of Franklin’s most recent Form 10-K and 10-Q filings.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question-and-answer-session. (Operator Instructions).

Now I would like to turn the call over Mr. Greg Johnson.

Greg Johnson

Thank you and good afternoon everyone. I am Greg Johnson, CEO along with Ken Lewis, our CFO. As always we thank you for taking the time to join us today and we hope you had a chance to listen to our prepared remarks which were available before the exchanged opened this morning.

In short, we are pleased to report another solid quarter highlighted by continued strong relative investment performance and record net new flows including strong growth in gross sales across our broad range of offerings particularly in our international products as momentum continues to build in many countries around the globe.

I will now open it up to your questions.

Question-and-Answer S



Our first question is from Bill Katz with Citigroup.

Bill Katz - Citigroup

Just two comments, two questions, I guess. First one would be, just from a big picture perspective, Greg, can you talk a little bit about how you see the potential handoff, if at all, between fixed income and equity and how you might be positioned for such a potential flow shift?

Greg Johnson

Well I think we feel that the shift will occur maybe it was starting a little bit over the last few months. I mean flows have certainly looked better and you know our growth just like when things were going gangbusters on the equity side we were pushing hard on a fixed income campaign and for the last three to six months we’ve been doing extremely well on the fixed income side we’ve been out there talking about equities and we have a 20-20 vision campaign which has been received extremely well and despite headwinds we are going to continue to talk about equities because we think that retail turn will happen and obviously we want to be well positioned and I think we feel that we have a very strong line up and it’s a matter of just again getting the attention on that line up and despite the record flows for the quarter we still are making sure that the distribution is focused on getting that equity story out there and I am not sure when it will turn, I think we’ve all been frustrating that its taken a bit longer I think investor sentiment here in the United States for a lot of reasons continues to be a little bit shaky and we are not seeing that in other parts of the globe, we are not seeing that in Europe and Asia and I’ve seen a tremendous rebound in our sales like the Asian growth fund that had $1.2 billion in net inflows for the quarter. So there are funds that are doing very well on the equity side but like most in the U.S. we still remain frustrated that the investors are not moving back.

Bill Katz - Citigroup

Okay second question I have if you look at your volumes outside the United States this was a particularly strong quarter I think it was $9 billion of inflow about 25% growth rate on those assets could you talk a little bit about may be some of the volume and the mixed drivers to some of that growth and may be on a temporal basis what might be happening into the middle part of April?

Greg Johnson

Well I think the as I mentioned the equity investor is back and whether its merging markets or more focus the aging growth fund. You know those have been two good sellers for us on a net basis as well as mutual global discovery fund. There hasn’t been a whole lot of chunky business moving actually more the bigger business on a separate account side with negative for the quarter. In global equities where had about a little over $700 million between two accounts that were redeemed in the global equity side. So you are saying fair amount of strength on the retail side around the globe for global equities and obviously global bonds which you know had outside of the U.S. just a little over $5 billion net inflows.

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