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Franklin Resources Inc BEN

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Morningstar’s Analysis

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Franklin's Purchase of O’Shaughnessy Asset Management Should Enhance Its SMA Business

Greggory Warren, CFA Sector Strategist

Analyst Note

| Greggory Warren, CFA |

While we do not expect to alter our $33 per share fair value estimate for narrow-moat Franklin Resources following news that the company is acquiring O’Shaughnessy Asset Management, a quantitative asset management firm focused on factor-based investing and custom indexing, we do admire Franklin's continued pursuit of avenues for improving its product breadth, performance, and/or distribution via bolt-on deals or carve outs like this one. The deal should add just over $6 billion in assets under management to Franklin's platform, with OSAM's custom indexing solution segment representing close to one third of that total. For some perspective, Franklin closed out August 2021 with $1.572 trillion in managed assets, the overwhelming majority of which was actively managed.

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Company Profile

Business Description

Franklin Resources provides investment services for individual and institutional investors. At the end of June 2021, Franklin had $1.552 trillion in managed assets, composed primarily of equity (35%), fixed-income (42%), multi-asset/balanced (10%) funds, alternatives (9%) and money market funds. Distribution tends to be weighted more toward retail investors (53% of AUM) investors, as opposed to institutional (45%) and high-net-worth (2%) clients. Franklin is also one of the more global firms of the U.S.-based asset managers we cover, with more than 35% of its AUM invested in global/international strategies and just over 25% of managed assets sourced from clients domiciled outside the United States.

One Franklin Parkway
San Mateo, CA, 94403
T +1 650 312-2000
Sector Financial Services
Industry Asset Management
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type High Yield
Employees 10,600