There was little in Franklin Resources' fiscal third-quarter results that would alter our long-term view of the firm. We expect to leave our $26 per share fair value estimate in place. We view the company's shares as being slightly undervalued right now.
Franklin is one of the 20 largest US-based asset managers, with just over 70% of its AUM sourced from domestic clients. It is the fifth-largest global manager of cross-border funds.
Bears
Franklin's mutual funds continue to underperform, with just 51%, 60%, and 44% of its AUM above peer medians on a one-, three-, and five-year basis, respectively, at the end of March 2024.
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Franklin Resources provides investment services for individual and institutional investors. At the end of April 2024, Franklin had $1.602 trillion in managed assets, composed primarily of equity (35%), fixed-income (35%), multi-asset/balanced (10%) funds, alternatives (16%) and money market funds (4%). Distribution tends to be weighted equally between retail investors (52% of AUM) and institutional accounts (46%), with high-net-worth clients accounting for the remainder. Franklin is one of the more global of the US-based asset managers we cover, with more than a third of its assets under management invested in global/international strategies and 30% of managed assets sourced from clients domiciled outside the United States.