Overall, U.S. relative performance rankings remain strong, especially within our fixed income and hybrid funds, taxable and tax-free fixed income. Relative performance percentages were essentially unchanged for March with strong long-term performance in municipal bonds and global fixed income. Franklin equity performance continues to be a standout with strong relative performance across hybrid growth and value strategies.Mutual Series was essentially unchanged, although we did see modest improvements in long-term performance since March. Eurozone exposure in a corresponding underweight to a more resilient U.S. market contributed to weakness in Templeton equity performance. As and when Eurozone market conditions improve, we expect to see a rebound in the performance of Templeton products. Assets under management ended the quarter about 2.5% lower at $707 billion, and the simple monthly average AUM increased slightly to almost $711 billion. The change in monthly average AUM, however, does not fully reflect the daily market movements that we experienced. Daily average AUM, which was about $711 billion in Q2, decreased almost 1% to $705 billion this quarter. And as you know, it's the daily average AUM that drives much of our revenue. The European debt crisis and concerns of a weakening global economy pushed equity markets lower during the quarter, reflected in the 7% decrease in equity AUM. However, as I already mentioned, AUM ended the quarter only about 2.5% lower because of the strength of our fixed income and hybrid products, illustrating a key benefit of diversification. The decline in equity AUM is also evident in the change in AUM by sales region, where internationally sourced AUM declined almost 5% compared with only a 1% decrease in U.S. AUM. This is due to the mix of international AUM that is more heavily weighted in global equities compared with the U.S., which has the benefit of our strong hybrid and tax-free strategies.
Long-term sales decreased by 14% this quarter as all investment objectives in sales regions experienced slowing sales as investors stepped to the sidelines. The one exception to this was our institutional business that attracted slightly higher sales. Redemptions also decreased 14% resulting in long-term net new flows of $4.7 billion.The U.S. based and CCAB-based Templeton Global Bond Fund remained our two top-selling funds on a gross basis this quarter. However, both funds experienced slightly negative net flows this quarter. Overall, global fixed income net new flows were $2.4 billion, a strong improvement from last quarter due to the continued interest in our CCAB Global Total Return Fund and several institutional global fixed income and emerging market debt offerings. Although we continue to promote equity investing in the U.S. and internationally through a number of ongoing campaigns, equity sales decreased 18%. The CCAB Templeton Asian Growth Fund remained our top-selling equity fund on a gross basis, but it did experience modest outflows due mostly to lower sales. Interest in our rising dividend in Franklin Growth Funds remained strong, and we did have several institutional fundings this quarter, primarily into emerging markets equity mandates. Within hybrid, the Franklin Income Fund remains one of our most popular strategies, but also had lower net new flows. In June, we initiated the launch of the next phase of the U.S.-based 2020 Vision equity campaign with the sub-campaign themed, Time to Take Stock. The pullback of the stock market in 2008 left a lasting impression on many investors causing anxiety about investing in equities and trillions of dollars sitting in low-yielding savings instruments. The new campaign is designed to help advisors and investors take stock of their current situation. It discusses key emotional biases that may be holding investors back and the key points that most investors are missing. It also shows how investors can rebuild their portfolios to reach their long-term goals, including actionable solutions to help them get back in the stock market. Read the rest of this transcript for free on seekingalpha.com