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Why Did Franklin’s Shares Rise on Decline in February AUM?


Franklin Resources Inc. BEN has announced preliminary assets under management (AUM) by its subsidiaries of $744.9 billion for February 2018. Results display 3.4% drop from $770.8 billion recorded as of Jan 31, 2018. Net market losses and outflows were primarily responsible for this decline. However, the figure inched up around 1% from the prior year.

Despite the plunge in February AUM, investors are optimistic on expectations of better market conditions backed by the improving U.S. economy, which led shares to rise 2.38%, following the release.

Month-end total equity assets came in at $317.1 billion, down around 4.9% from the previous month but up 2.7% year over year. Of the total equity assets, around 66% were from international sources, while the remaining 34% came in from the United States.

Total fixed income assets were $280.9 billion, down 1.4% from the previous month and slightly from the prior year. Overall, tax-free assets accounted for only 24% of the fixed-income assets, while the remaining 76% was taxable.

Franklin recorded $140.1 billion in hybrid assets, which was down 3.6% from $145.4 billion witnessed in the previous month and 1.4% from $142.1 billion reported in February 2017.

Cash management funds came in at $6.8 billion, in line with the prior month and up from $6.3 billion recorded in the year-ago period.

The company’s global footprint is an exceptionally favorable strategic point as its AUM is well diversified. Nevertheless, regulatory restrictions and sluggish economic recovery might mar AUM growth and escalate costs.

Franklin currently carries a Zacks Rank #3 (Hold). Shares of the company have declined around 3.6% over the last six months compared with 15.4% growth recorded by the industry.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other asset managers, Invesco Ltd. IVZ, T. Rowe Price Group, Inc. TROW and Legg Mason Inc. LM are expected to release preliminary AUM results for February 2018, later this week.

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