FRANKLIN RESOURCES INC

FRANKLIN RESOURCES INC Annual Report Summary – Plain Talk for Investors

Let’s cut through the noise and see how Franklin Resources, the $1.4 trillion investment manager, really performed this year.

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The Big Picture

What they do: Manages mutual funds, ETFs, and retirement accounts. Think 401(k)s, bonds, stocks, and newer areas like private investments and crypto.
This year’s story: Markets saved them. Investors pulled $97.4 billion out of their core funds (especially bonds), but market gains (+$125.8B) kept total assets flat at $1.4 trillion.

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By the Numbers

• Revenue: $7.8B (↓3% from last year)
• Profit: $882M (↓12%)
• Dividend: $1.16/share (steady, supported by $4.2B cash reserve)

Translation: Fewer customers stuck around for their main services, but they’re still profitable and can pay dividends for years.

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Wins vs. Losses

✅ Bright spots:

• Alternative investments (private funds, crypto) attracted $12.6B.
• Short-term cash management brought in $12.6B (nervous investors parking money).

❌ Trouble zones:

• $141.9B fled their bond division (Western Asset Management).
• Long-term fund outflows hit $441.3B (↑26% from last year).

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Financial Health Check

• Cash: $4.2B (enough to cover dividends for 2+ years)
• Debt: $2.1B (↓8% – they’re paying it down)
  Verdict: Not in crisis, but needs to stop the bleeding in bonds.

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Top Risks to Watch

1. Bond fund collapse: If Western Asset keeps losing clients, fees drop.
2. Passive investing: Only 7% of Franklin’s assets are in ETFs. Index funds (like Vanguard’s) are eating their lunch.
3. Crypto/alternatives: A small part of their business – could boost growth or blow up.

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How They Compare

• Vs. BlackRock/Vanguard: Franklin shrank 1% this year; rivals grew.
• Active management: 93% of their funds are actively managed (higher fees), but investors are choosing cheaper index funds.

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What’s Next?

• Priority #1: Fix the bond division (Western Asset).
• Betting on: AI tools for investors and global expansion.
• Wildcard: New ESG funds – too early to tell if they’ll catch on.

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The Bottom Line for Investors

Good for:

• Income seekers (reliable dividend, strong cash reserves).
• Investors who believe active management can make a comeback.

Think twice if:

• You want growth (AUM and profits are shrinking).
• You’re skeptical about their ability to compete with passive giants.

Key takeaway: Franklin’s a stable dividend payer facing serious industry headwinds. Watch Western Asset’s performance next year – if bond outflows slow, there’s hope. If not, this could be a longer-term decline.

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Note: Franklin’s annual report focused heavily on financial metrics but provided limited details about specific client retention strategies or turnaround plans for struggling divisions.